the-eye.eu · More For Dummies Titles to Keep You Living Well When Times Are Tough 401(k)s For Dummies, by Ted Benna and Brenda Watson Newmann (Wiley) 529 & Other College Savings

Living Well in aDown Economy

FOR

DUMmIES‰

by Tracy L. Barr

01_401170-ffirs.qxp 7/24/08 12:29 AM Page iii

01_401170-ffirs.qxp 7/24/08 12:29 AM Page ii


FOR

DUMmIES‰

01_401170-ffirs.qxp 7/24/08 12:29 AM Page i

01_401170-ffirs.qxp 7/24/08 12:29 AM Page ii


FOR

DUMmIES‰

by Tracy L. Barr

01_401170-ffirs.qxp 7/24/08 12:29 AM Page iii

Living Well in a Down Economy For Dummies®

Published byWiley Publishing, Inc.111 River St.Hoboken, NJ 07030-5774www.wiley.com

Copyright © 2008 by Wiley Publishing, Inc., Indianapolis, Indiana

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in anyform or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise,except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, withouteither the prior written permission of the Publisher, or authorization through payment of theappropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA01923, 978-750-8400, fax 978-646-8600. Requests to the Publisher for permission should beaddressed to the Legal Department, Wiley Publishing, Inc., 10475 Crosspoint Blvd., Indianapolis, IN46256, 317-572-3447, fax 317-572-4355, or online at http://www.wiley.com/go/permissions.

Trademarks: Wiley, the Wiley Publishing logo, For Dummies, the Dummies Man logo, A Referencefor the Rest of Us!, The Dummies Way, Dummies Daily, The Fun and Easy Way, Dummies.com andrelated trade dress are trademarks or registered trademarks of John Wiley & Sons, Inc. and/or itsaffiliates in the United States and other countries, and may not be used without written permis-sion. All other trademarks are the property of their respective owners. Wiley Publishing, Inc., isnot associated with any product or vendor mentioned in this book.

LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: THE PUBLISHER AND THE AUTHOR MAKENO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COM-PLETENESS OF THE CONTENTS OF THIS WORK AND SPECIFICALLY DISCLAIM ALL WAR-RANTIES, INCLUDING WITHOUT LIMITATION WARRANTIES OF FITNESS FOR A PARTICULARPURPOSE. NO WARRANTY MAY BE CREATED OR EXTENDED BY SALES OR PROMOTIONALMATERIALS. THE ADVICE AND STRATEGIES CONTAINED HEREIN MAY NOT BE SUITABLEFOR EVERY SITUATION. THIS WORK IS SOLD WITH THE UNDERSTANDING THAT THE PUB-LISHER IS NOT ENGAGED IN RENDERING LEGAL, ACCOUNTING, OR OTHER PROFESSIONALSERVICES. IF PROFESSIONAL ASSISTANCE IS REQUIRED, THE SERVICES OF A COMPETENTPROFESSIONAL PERSON SHOULD BE SOUGHT. NEITHER THE PUBLISHER NOR THEAUTHOR SHALL BE LIABLE FOR DAMAGES ARISING HEREFROM. THE FACT THAT ANORGANIZATION OR WEBSITE IS REFERRED TO IN THIS WORK AS A CITATION AND/OR APOTENTIAL SOURCE OF FURTHER INFORMATION DOES NOT MEAN THAT THE AUTHOR ORTHE PUBLISHER ENDORSES THE INFORMATION THE ORGANIZATION OR WEBSITE MAYPROVIDE OR RECOMMENDATIONS IT MAY MAKE. FURTHER, READERS SHOULD BE AWARETHAT INTERNET WEBSITES LISTED IN THIS WORK MAY HAVE CHANGED OR DISAPPEAREDBETWEEN WHEN THIS WORK WAS WRITTEN AND WHEN IT IS READ.

For general information on our other products and services, please contact our Customer CareDepartment within the U.S. at 800-762-2974, outside the U.S. at 317-572-3993, or fax 317-572-4002.

For technical support, please visit www.wiley.com/techsupport.

Wiley also publishes its books in a variety of electronic formats. Some content that appears inprint may not be available in electronic books.

Library of Congress Control Number: 2008933743

ISBN: 978-0-470-40117-0

Manufactured in the United States of America

10 9 8 7 6 5 4 3 2 1

01_401170-ffirs.qxp 7/29/08 11:00 PM Page iv

More For Dummies Titles to Keep You LivingWell When Times Are Tough401(k)s For Dummies, by Ted Benna and Brenda Watson Newmann(Wiley)529 & Other College Savings Plans For Dummies, by Margaret A.Munro, EA (Wiley)Auto Repair For Dummies, by Deanna Sclar (Wiley)Canning & Preserving For Dummies, by Karen Ward (Wiley)Cool Careers For Dummies, 3rd Edition, by Marty Nemko, PhD, andRichard N. Bolles (Wiley)Credit Repair Kit For Dummies, by Stephen R. Bucci and Terry Savage(Wiley)Everyday Math For Dummies, by Charles Seiter (Wiley)Foreclosure Self-Defense For Dummies, by Ralph R. Roberts, Lois Maljak,Paul Doroh, and Joe Kraynak (Wiley)Free $ for College For Dummies, by David Rosen and Caryn Mladen(Wiley)Frugal Living For Dummies, by Deborah Taylor-Hough (Wiley)Gifts from the Kitchen For Dummies, by Andrea Swenson (Wiley)Haricutting For Dummies, by J. Elaine Spear (Wiley)Home-Based Business For Dummies, 2nd Edition, by Paul Edwards,Sarah Edwards, and Peter Economy (Wiley)Home Maintenance For Dummies, by James Carey and Morris Carey(Wiley)Insurance For Dummies, by Jack Hungelmann (Wiley)Job Interviews For Dummies, 3rd Edition, by Joyce Lain KennedyPersonal Bankruptcy Laws For Dummies, by James P. Caher and JohnM. Caher (Wiley)Personal Finance Workbook For Dummies, by Sheryl Garrett (Wiley)Reconstructing Clothes For Dummies, by Miranda Caroligne Burns(Wiley)Resumes For Dummies, 5th Edition, by Joyce Lain Kennedy (Wiley)Slow Cookers For Dummies, by Tom Lacalamita and Glenna Vance(Wiley)Stress Management For Dummies, by Allen Elkin (Wiley)Telecommuting For Dummies, by Minda Zetlin (Wiley)

01_401170-ffirs.qxp 7/24/08 12:29 AM Page v

Publisher’s AcknowledgmentsWe’re proud of this book; please send us your comments through our Dummiesonline registration form located at www.dummies.com/register/.

Some of the people who helped bring this book to market include the following:

Acquisitions, Editorial, and MediaDevelopment

Senior Project Editor: Christina Guthrie

Acquisitions Editor: Lindsay Lefevere

Senior Copy Editors: Sarah Faulkner,Danielle Voirol, Victoria M. Adang

Editorial Program Coordinator: ErinCalligan Mooney

Technical Editors: Joseph Nierman,Karen Bartholomew

Editorial Manager: Christine Meloy Beck

Editorial Assistants: Joe Niesen, DavidLutton, Jennette ElNaggar

Cover Photos: ©Corbis

Cartoons: Rich Tennant(www.the5thwave.com)

Composition Services

Project Coordinator: Erin Smith

Layout and Graphics: Erin Zeltner

Proofreaders: Melissa Bronnenberg,Christopher M. Jones

Indexer: Broccoli Information Mgt.

Publishing and Editorial for Consumer Dummies

Diane Graves Steele, Vice President and Publisher, Consumer Dummies

Kristin A. Cocks, Product Development Director, Consumer Dummies

Michael Spring, Vice President and Publisher, Travel

Kelly Regan, Editorial Director, Travel

Publishing for Technology Dummies

Andy Cummings, Vice President and Publisher, Dummies Technology/General User

Composition Services

Gerry Fahey, Vice President of Production Services

Debbie Stailey, Director of Composition Services

01_401170-ffirs.qxp 7/24/08 12:29 AM Page vi

Contents at a Glance

Introduction ...................................................1

Part I: Facing Off Against a Recession .............9#1: Determine Your Net Worth...............................................................11#2: Calculate Spendable Income............................................................13#3: Create a Monthly Budget..................................................................20#4: Breathe Away Tension ......................................................................24#5: Tense Your Way to Relaxation .........................................................26#6: Stretch Away Your Stress .................................................................30#7: Lift a Finger for Self-Massage ...........................................................32#8: Practice Habits of Effective Stress Managers ................................35

Part II: Bumping Up Your Bring-Home ...........37#9: Update and Customize Your Resume..............................................39#10: Make Your Resume Stand Out .......................................................43#11: Get Acquainted with New Interview Trends ................................46#12: Stand Out in an Interview...............................................................49#13: Nail the Video Interview .................................................................52#14: Make the Most of a Phone Interview ............................................54#15: Look for Good Jobs Online.............................................................56#16: Look into Federal Jobs....................................................................59#17: Prepare for a Career Change..........................................................60#18: Figure Out What You Really Want to Do .......................................62#19: Persuade Your Organization to Let You Telecommute...............65#20: Find Telecommuting Work .............................................................68#21: Consider Self-Employment .............................................................72#22: Get Acquainted with Home-Based Businesses ............................74#23: Get New-Business Cash Flowing....................................................76#24: Steps to Take before Leaving Your Job.........................................79#25: Take Tax Deductions on Home-Based Businesses ......................82#26: Ensure the Survival of Your Home-Based Business

in Tough Times .................................................................................85#27: Choose between Itemized and Standard Deductions .................87#28: Boost Your Household Income ......................................................89

02_401170-ftoc.qxp 7/24/08 12:29 AM Page vii

Living Well in a Down Economy For Dummies viii

Part III: Putting Your Personal Finances on Firm Footing ............................................93

#29: Avoid Unnecessary Fees.................................................................95#30: Shop Around for Insurance ............................................................97#31: Raise Your Deductible to Save on Insurance ...............................99#32: Save Money on Life Insurance .....................................................100#33: Qualify for Homeowner Policy Discounts ..................................102#34: Take Advantage of Coverage You Already Have........................104#35: Look for Discounts and Premium Credits

from Your Car Insurance ...............................................................106#36: Save on Medical Coverage Offered by Your Car Insurance......109#37: Continue Health Coverage When You Leave Your Job .............111#38: Cap Your Out-of-Pocket Health Expenses ..................................113#39: Save on Individual Health Coverage ...........................................115#40: Use Medical Savings Accounts ....................................................116#41: Tap into Temporary Health Insurance........................................118#42: Know the Tax Benefits of a 401(k) Plan ......................................120#43: Continue to Invest, Even at a Reduced Amount........................122#44: Borrow from Your 401(k)..............................................................124#45: Let Your 401(k) Roll Over to Avoid Taxes ..................................127#46: Investigate Tax-Deferred Ways to Save for College ...................130#47: Squeeze Out Every Drop of Available College Money ..............133#48: Look into Federal Assistance Programs .....................................137#49: Make Use of Federal Loans...........................................................139#50: Defer or Discharge Student Loan Debt .......................................143#51: Consolidate Your College Loans..................................................146#52: Find College-Based Scholarships ................................................148#53: Access State and Local Scholarships..........................................149#54: Tap Organizations for Scholarships............................................151#55: Accept Work-Study Opportunities ..............................................152#56: Negotiate Better Financial Aid.....................................................153#57: Refinance a Fixed-Rate Mortgage ................................................155

Part IV: Living a Recession-Busting Life.......157#58: Develop Good Shopping Habits...................................................159#59: See through the Gimmicks Grocery Stores Use.........................161#60: Use Coupons Wisely......................................................................163#61: Target Seasonal Grocery Sales.....................................................164

02_401170-ftoc.qxp 7/24/08 12:29 AM Page viii

#62: Plan Your Meals Economically.....................................................166#63: Save on Snacks...............................................................................170#64: Stretch One Meal into Two (Or More) ........................................171#65: Save on Baby Food ........................................................................174#66: Cook Up Money Savings ...............................................................176#67: Can It! ..............................................................................................179#68: Other Ways to Save in the Kitchen..............................................182#69: Save on Salon Expenses................................................................184#70: Expand Your Wardrobe.................................................................185#71: Remove Stains from Clothing.......................................................188#72: Reconstruct Your Clothes ............................................................190#73: Find Fun in Community Resources .............................................193#74: Have Fun in Your Own Backyard and Beyond ...........................194#75: Save for a Family Vacation ...........................................................197#76: Travel on a Few Dollars a Day .....................................................198#77: Save on Phone Bills .......................................................................202#78: Stay Cool on the Cheap ................................................................204#79: Warm Up for Less ..........................................................................206#80: Make Your Own Cleaning Solutions ............................................209#81: Replace a Roof Shingle..................................................................213#82: Find Roof Leaks .............................................................................214#83: Add More Insulation......................................................................216#84: Insulate Pipes.................................................................................219#85: Insulate Heat Ducts .......................................................................220#86: Test and Fix a Window Air Leak...................................................221#87: Stop Air Leaks around Doors .......................................................223#88: Identify Plumbing Leaks ...............................................................224#89: Improve Water Heater Efficiency.................................................225#90: Help Your Furnace Work More Efficiently ..................................227#91: Save on Your Fuel Expenses.........................................................230#92: Change Your Own Car Oil .............................................................232#93: Take Care of Your Tires.................................................................236#94: Hire a Pro without Getting Taken for a Ride ..............................239

Part V: Making the Most of Holidays and Other Special Events.............................243

#95: Throw a Party on a Budget ..........................................................245#96: Entertain on a Shoestring.............................................................247#97: Spend Less on Holiday Decorations and Gifts...........................249

Contents at a Glance ix

02_401170-ftoc.qxp 7/24/08 12:29 AM Page ix

#98: Get Creative with Gift Giving........................................................252#99: Give and Package Sweets and Treats..........................................255#100: Save on Fine Dining .....................................................................258

Part VI: Staying Afloat If the Boat Starts to Sink .............................................261

#101: Look for Signs of Financial Trouble...........................................263#102: Understand the Cost of Bad Credit ...........................................266#103: Get Copies of Your Credit Report and Scores..........................268#104: Check Your Credit Report ..........................................................270#105: Dispute Inaccurate Info on Your Credit Report .......................272#106: Add Positive Info to Your Credit Report...................................275#107: Bring Credit Card Debt Under Control......................................276#108: Take Credit Solutions into Your Own Hands............................279#109: Seek Help for These Credit Problems .......................................282#110: Work with a Credit Counseling Agency ....................................284#111: Create a Debt-Management Plan ...............................................287#112: Talk to Creditors to Work Out a Solution .................................289#113: Negotiate a Payback Arrangement with Collectors ................291#114: Avoid Credit-Repair Scams.........................................................293#115: Keep Credit Under Control While Unemployed ......................294#116: Use Home Equity to Consolidate Debts....................................297#117: Take Control When Foreclosure Looms ...................................300#118: Draft a Plan of Attack to Offset Foreclosure ............................304#119: Understand Types of Bankruptcy .............................................307#120: Try to Avoid Bankruptcy ............................................................310#121: Negotiate with Creditors to Avoid Bankruptcy .......................313#122: Choose Which Bills to Pay When You File

for Bankruptcy................................................................................316#123: Negotiate with the IRS ................................................................318

Part VII: The Part of Tens ............................321#124: Ten Ways to Trim the Money Tree ............................................323#125: Ten Ways to Handle Financial Emergencies.............................325

Index .........................................................327

Living Well in a Down Economy For Dummies x

02_401170-ftoc.qxp 7/24/08 12:29 AM Page x

Introduction

Ask an economist what a recession is, and you’ll likelyget the answer “a decline in gross domestic product

lasting two or more consecutive quarters.” (Gross domes-tic product, or GDP, is the total value of goods and serv-ices produced in a country.) At the time of this writing,America isn’t officially in a recession (although many ana-lysts say it’s just a matter of getting the numbers that’llprove that the second-quarter decline has actuallyoccurred), but the economy is definitely in a downturn.Home values are falling, employment is down, realincome is down, and energy costs are skyrocketing.

So how long will this downturn last? No one knows. Somethink it’ll be over in a matter of months; others predictthe recession could last a year or longer.

None of this is good news. Fortunately, you can do morethan cross your fingers and hope for good luck. During arecession, you have the following main objectives:

� Prepare yourself in case you lose your job. As com-panies earn less, they look for ways to save money.Unfortunately, payroll reduction (read “layoffs and fir-ings”) is a key way to save. Fortunately, by preparinga resume and seeing this as an opportunity to explorealternative careers and ways to work, you can beproactive in protecting yourself in case you find your-self on the job market.

03_401170-intro.qxp 7/24/08 12:29 AM Page 1

� Take control of your finances. Figure out what youhave and what you spend and then make deliberatedecisions about ways to rein in your spending. Yourgoal should be to live within your means if you’renot already, to preserve your long-term financialgoals, and to save enough to see you through aperiod of unemployment in case you lose your job.

� Continue to live and enjoy your life while main-taining control of your finances. The key isn’t justto scale back but to do so in a way that you don’tfeel deprived. You can save a lot just by being asavvier consumer and by spending your money alittle differently.

� Have a plan to follow if the worst happens. Inuncertain times, you may find yourself, despite yourbest efforts, facing a financial catastrophe like abankruptcy or foreclosure. Even in these circum-stances, you still have options — maybe not many,and maybe not pleasant ones, but options that canhelp you weather even these storms.

Bottom line: In a stumbling economy, you have to treadcarefully, but you can still move forward. This book helpsyou one step at a time.

About This BookLiving Well in a Down Economy For Dummies containsmore than 125 tips and suggestions to help you throughtough economic times. How can you scale back on cele-brations without sacrificing the fun? How can you con-tinue to save for retirement when you need all yourincome to make ends meet now? What do you do whencollege loans — or tuition — come due and money istight? How can you save money on household expenses?

Living Well in a Down Economy For Dummies 2

03_401170-intro.qxp 7/24/08 12:29 AM Page 2

This book answers these and other questions for peoplelooking to save money without sacrificing quality of life.

Each part of this book is divided into tips containinginformation relevant to that part’s theme. The great thingabout this book is that you decide where to start andwhat to read. It’s a reference you can jump into and out ofat will. Thumb through to glance at a variety of tips, or goto the Table of Contents to find the different categories of tips.

Conventions Used in This BookThis book uses a few conventions to help you navigatethrough:

� Italics are used for emphasis and to highlight newwords or terms that are defined.

� Boldfaced text indicates keywords or phrases andthe action part of numbered steps.

� Monofont is used for Web addresses.

Foolish AssumptionsIn writing this book, I made some assumptions about you:

� You feel uneasy about the economy and want to getyourself and your family in a better financial position.

� You worry about losing your job, or you’ve alreadylost your job, and you need advice on finding workand cutting your expenses.

Introduction 3

03_401170-intro.qxp 7/24/08 12:29 AM Page 3

� You want to know how you can continue to plan forlong-term financial goals like retirement and collegesavings when money’s tight.

� You want to be a savvier, more thoughtful consumerso you can continue to enjoy life’s pleasures withoutspending too much.

How This Book Is OrganizedThis book is organized into parts so you can find informa-tion quickly and easily. Each part represents a particularcategory of tips.

Part I: Facing Off Against aRecession

When facing a gloomy financial picture, the first hurdle istaking back control. You may not be able to whip theeconomy into shape by yourself, but you can regain con-trol of your personal finances and attitude. This part pro-vides tips that can help.

Part II: Bumping Up Your Bring-Home

A key challenge during a slowing economy is to ensure youhave enough money to take care of your financial obliga-tions. That means being prepared to find a new job, changingcareers if you must, and coming up with alternative ways toearn a living if the traditional route (read “a 9-to-5 job work-ing for others”) isn’t working out the way you’d like.


03_401170-intro.qxp 7/24/08 12:29 AM Page 4

Part III: Putting Your PersonalFinances on Firm Footing

Financial security doesn’t just mean having a bunch ofmoney in the bank; it means being smart about yourfinancial decisions, especially during uncertain economictimes. This part includes tips that help stabilize yourfinancial position now and allow you to continue to pre-pare for the future.

Part IV: Living a Recession-Busting Life

The bulk of your income probably goes to your everydayhome life. By cutting back on your household expenses —groceries, energy bills, auto and home maintenancecosts, for example — you can save enough to put yourpersonal finances on steadier ground. And here’s asecret: Reducing household expenses doesn’t requirethat you downscale to a pup tent and a pot of beans. Thetips in this part tell you how.

Part V: Making the Most ofHolidays and Other SpecialEvents

Who says recessions have to be a drag? Nearly everyone,actually. But that doesn’t mean you have to forego life’spleasures. This part offers tips on how to keep the goodtimes rolling in a way that doesn’t send your bank

Introduction 5

03_401170-intro.qxp 7/24/08 12:29 AM Page 5

account into the red after every holiday or special event.In fact, you’ll likely discover that being more thoughtfulabout what you spend results in more meaningful celebrations.

Part VI: Staying Afloat if theBoat Starts to Sink

Sometimes, despite your best efforts, things spiral out ofcontrol. If you find yourself facing out-of-control credit,bankruptcy, or foreclosure, your choices can determinehow much you lose and how long it’ll take you to recover.This part gives suggestions that can help you make theright decisions.

Part VII: The Part of TensWant to know ten ways to handle financial hurdles? Howabout ten ways to trim the money tree? Then this part isfor you.

Icons Used in This BookMany people, when facing stressful times, become veryfocused. In addition to myriad tips, this book uses the fol-lowing icons to highlight information:

This icon appears beside especially important informa-tion: stuff that you absolutely need to know to makeinformed, wise decisions.


03_401170-intro.qxp 7/24/08 12:29 AM Page 6

When times are tough and money is tight, mistakes areespecially dangerous. This icon warns you about thingsthat may have serious negative consequences.

Where to Go from HereWhether you read this book from front to back or jump inand out as the need arises, you’re certain to find a varietyof ways to cut your expenses and stabilize your finances.Look at the Table of Contents to find general categories oftips, look in the index to find specific tips, or just flipthrough until something catches your eye.

Introduction 7

03_401170-intro.qxp 7/24/08 12:29 AM Page 7


03_401170-intro.qxp 7/24/08 12:29 AM Page 8

Part I

Facing Off Againsta Recession

04_401170-pp01.qxp 7/24/08 12:30 AM Page 9

In this part . . .

Rising costs, falling income, uncertain employ-ment, and no real idea how long the downturn

will last: Harbingers like these can make anyone feelthat economic stability is slipping beyond hisgrasp. Although it’s true you can’t control what’sgoing on with the economy (even the FederalReserve seems to be having a particularly difficulttime of it lately!), you can take hold of your ownfinances and your attitude. And because everyonedeserves a break during stressful times, this partalso gives you some useful relaxation tips.

04_401170-pp01.qxp 7/24/08 12:30 AM Page 10

11#1

Determine Your Net Worth

A net worth statement is simply a listing of all you ownand all you owe; the difference between the two is

your net worth. Your net worth is like a financial reportcard. Knowing your net worth gives you a good idea ofyour financial situation.

To figure out your net worth, fill out the following work-sheet. This information becomes a benchmark you canuse to measure your current financial status relative toothers and to where you want to be, from year to year.

Unhappy with your net worth?If your net worth isn’t what you want it to be, don’t despair. Prioritize bothyour assets and your liabilities. Which assets are most important to youand your standard of living? Are there any you could do without? Whichliabilities need to be paid off first? Consider interest rates and other termsfor any loan you have, and then come up with a plan to pay down yourdebt. Part III can help.

05_401170-ch01.qxp 7/24/08 12:30 AM Page 11

Assets Value Liabilities

Total Assets Total Liabilities

Balance

Cash Accounts

Checking

Savings

Money Market

Cash on Hand

Personal Use Assets

Residence

Personal Property

Auto(s)

Boat(s)

Vacation Home

Other

$ Home Mortgage $

$ Home EquityLoan/Line ofCredit

Auto Loans

$

Investment Assets

Brokerage Accounts

Mutual Funds

IRAs

401(k), 403(b)

Other retirement plans

$ InvestmentLoans

Margin Account

Loans Against401(k), 403(b)

$

Total AssetsMinus TotalLiabilities = NetWorth

$

Cash Value of LifeInsurance Policies $

Loans AgainstLife Insurance $

DeferredCompensation $

Salary Advances

$ $

Loans / AccountsReceivable $

Loans /AccountsPayable

$

$

Part I: Facing Off Against a Recession 12

05_401170-ch01.qxp 7/24/08 12:30 AM Page 12

13#2

Calculate Spendable Income

To figure out your spendable income, first gather twoto four copies of recent paycheck stubs and complete

the worksheet that accompanies this tip. Note: Somedeductions occur monthly rather than per pay period, sotwo to four consecutive paychecks should reveal alldeductions. If you receive two paychecks per month anda certain deduction occurs only on the first paycheck,divide this amount by 2 when completing the worksheet.

05_401170-ch01.qxp 7/24/08 12:30 AM Page 13

1. Gross Income per pay period

Minus:

Taxes

State

Federal

Local/City

Social Security (FICA)

Medicare

2. Total taxes withheld

3. Total payroll deductions (excluding taxes)

Automatic Payroll Deductions

Life Insurance

Medical Insurance

Disability Insurance

Dental Insurance

Charitable Contributions

Retirement Plan 401(k), 403(b), and so on

Retirement Plan Loan Repayment

Deferred Compensation Plan

Employee Stock Purchase Plan

Flexible Spending Acct FSA (Section 125)

U.S. Savings Bonds

a. Weekly = 52

b. Every other week = 26

c. Twice a month = 24

d. Monthly = 12

Other Automatic Drafts for Investments

Other Automatic Drafts for Expenses

4. Net income per pay period (Line 1 − [Line 2 + Line 3])

6. Multiply Line 4 times Line 5 for annual net income

5. How many times are you paid per year?

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$


05_401170-ch01.qxp 7/24/08 12:30 AM Page 14

7. List traditional job-related expenses (annual)

8. List nontraditional job-related expenses (annual)

Expense

Commuting costs

Clothing and clothing maintenance

Child care

Unreimbursed business expenses

Expense Annual Cost

Annual Cost

Equals your net hourly spendable income

You may incur these expenses due to the stress of your job, long hours, orworking conditions. Examples include dining out frequently because youíreworking long hours, going out for lunch instead of preparing them at home,treating yourself to much-needed massage therapy or vacations to helpdecompress from the stresses of your job, and so on.

10. Subtract Line 9 from Line 6 for annual spendable income

9. Total annual expenses on Lines 7 and 8

11. Divide Line 10 by number of hours worked per year (traditional full-timework equals 2,000 hours)

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

Calculate Spendable Income 15

05_401170-ch01.qxp 7/24/08 12:30 AM Page 15


Subtract Required ExpensesYour required expenses, or needs, must come first. Tofigure out what your required expenses are, fill out thenext worksheet. (Sorry — no enhanced phone services,cellphones, cable TV, or high-speed Internet, unlessrequired for employment, are included in needs.)

Cut back on unrequired expensesYou can reduce the amount of money you spend in all kinds of ways, andmany of them don’t require that you reduce your standard of living —only that you make more deliberate decisions about what’s important toyou and what you need. For example, consider the following:

� Can you change your phone package to eliminate the services youdon’t use and the fees associated with them?

� Can you downgrade your cable package to save money and still getthe majority of the channels that matter most to you?

� Are you paying a monthly service fee to have a checking account?You don’t have to; you can find lots of options on the Internet and inyour community.

� Are you paying an annual fee for your credit card? Are you gettingsubstantial value out of paying that fee? If not, cancel that card anduse one that doesn’t charge an annual fee.

05_401170-ch01.qxp 7/24/08 12:30 AM Page 16

Shelter:

Required Monthly Expenses (Needs)

Home Mortgage or rent $_______________

Utilities:

Electric $_______________

Gas $_______________

Water, sewer, and trash pickup $_______________

Basic phone service $_______________

Protection: Include the things you can’t afford to be without.

Life insurance $_______________

Disability insurance $_______________

Homeowners or renters insurance $_______________

Health insurance $_______________

Auto insurance $_______________

Healthcare/medical and dental care $_______________

Prescription drugs $_______________

Child care $_______________

Rainy-day fund (minimum of 10 percent of gross income) $_______________

Food: This category doesn’t include dining out.

Groceries (basic essentials only) $_______________

Clothing and clothing maintenance: Presuming that you have some clothes now, ask yourself what else you really need. $_______________

Basic Hygiene:

Personal: Toothbrush, deodorant, soap (for example) $_______________

Household: Laundry detergent, toilet paper, and so on $_______________

Transportation:

Automobile loan or lease payments $_______________

Auto maintenance $_______________

Gasoline $_______________

Other: Tolls, parking, public transportation $_______________


05_401170-ch01.qxp 7/24/08 12:30 AM Page 17

Solve for ShortfallsIf you have a shortfall after you calculate your requiredexpenses (refer to the preceding worksheet), something’sgotta give. Consider the following suggestions whenyou’re faced with a shortfall:

� Don’t completely cut any required expenditures.You may be tempted to drop insurance coverageand/or save the amount of money you need to besaving for a rainy day. You aren’t doing yourself anyfavors by skipping these items, and the decision willcome back to haunt you sooner or later.

Legal Requirements:

Real estate and property taxes $_______________

Child support $_______________

Alimony $_______________

Required debt payments not listed elsewhere

School loans $_______________

Personal loans $_______________

Credit cards $_______________

Other debt $_______________

Total required monthly expenses (Needs) $_______________

After-tax income (from previous worksheet, Line 1 – Line 2) $_______________

Note: If you included all expenses for the household, add the after-tax income of both spouses/partners together.

(After-Tax Income minus Total Needs) Surplus or Shortfall $_______________


05_401170-ch01.qxp 7/24/08 12:30 AM Page 18

� Review each of the needs categories and considerways to reduce necessary expenses. You may beable to obtain less expensive insurance and savemoney on groceries, clothing, and transportation byshopping around.

� Consider your employment. Often, the only reason-able option you, your spouse, or your partner has isto increase income by working overtime (if that’s anoption), taking on a part-time job, or changing jobs.

Tracking your expenses is especially useful when youroutgoing cash flow exceeds your income. For a clear pic-ture of what you’re spending money on (you’ll be sur-prised how much you fritter away), keep a log of everycent you spend. Write down everything, whether you pur-chase a soda at work, buy gasoline on the way home, orgo to the movies. Also track whether you paid by cash,check, or debit or credit card; who you paid; and whetherthe expenditure falls into the need or want category.


05_401170-ch01.qxp 7/24/08 12:30 AM Page 19

20 #3

Create a Monthly Budget

Does the word budget send chills up your spine? Itshouldn’t. Budgets allow you to be organized and

have some control over what you spend. They help youto decide how to spend your money, plan for your future,pay off existing debt, and save a few pennies each monthby reducing wasteful and impulsive purchases.

Step 1: Categorize Your ExpensesWhen you begin setting up a monthly budget, start withbig categories before breaking your budget down intosmaller expense categories. A good list of basic budgetcategories to begin with includes the following:

� Housing: Mortgage/rent, repairs, property taxes,cleaning supplies, homeowner’s/renter’s insurance,utilities, furnishings, decor

� Food: Groceries, meals out, pizza delivery, snacksand beverages at work

� Transportation: Car payments, insurance, gas, oilchanges, parking, repairs and maintenance, publictransportation fees

05_401170-ch01.qxp 7/24/08 12:30 AM Page 20

� Medical: Insurance, out-of-pocket expenses such asdeductibles and non-insurance covered medicalservices, pharmacy, eye care, dental

� Clothing: New purchases, dry cleaning, repair

� Personal: Cosmetics, haircuts, cleansers

� Insurance: Life insurance and any other insurancenot covered under home, transportation, or medicalexpenses

� Education: Tuition, dues/fees, school pictures, year-books, school supplies, books

� Credit accounts: Major credit cards, departmentstore cards, lines of credit through your bank orother lender, any other outstanding debt

� Gifts: Holidays, birthdays, graduations, weddings,showers

� Recreation: Vacations, movies, books, magazines,newspapers, cable TV, restaurants, sporting events,sports equipment

� Savings: Long-term and short-term goals, as well asretirement

� Taxes: Property and excise tax, for example

� Donations: Charities, religious groups, and so on

Be sure to set aside money each month for those yearlyand quarterly payments that often sneak up on you whenyou least expect them. If you spend $1,200 on your yearlyproperty taxes, divide that number by 12 and set aside$100 per month so you aren’t caught off guard by yourproperty taxes, insurance payments, or any other peri-odic bills.

Create a Monthly Budget 21

05_401170-ch01.qxp 7/24/08 12:30 AM Page 21

Within each general budget category, some items areessential (the mortgage or rent payment, electric bill, andgroceries); others are extra (new furniture, gifts, and pizzadelivery). From your first list of general budget items,develop two separate budget lists, one for essentials andthe other for extras. Then look through these lists to findflexible budget expenses where you can cut back by usingthe tips and advice throughout this book. Put a star next tothese flexible items so you can identify them.

Step 2: Estimate What You SpendGo through your checkbook and any other receipts orrecords you’ve kept over the past few months so you cantrack how much you actually spend on essentials. Thenfor one month, keep a detailed diary of all your extra pur-chases, even for cheap things like newspapers or coffeefrom the vending machine at work. Little expensesquickly add up to big money when they’re made on adaily basis. These smaller, out-of-pocket purchases arefrequently made with cash, so they usually don’t show upin your check register; writing them down makes youaware of where the cash is dribbling out of your life.

For keeping track of your budget, take a look at officesupply stores for an easy-to-use, inexpensive family budgeting book. If you want something small that you can carry with you at all times, the BudgetMap (budgetmap.com) is a specially designed ledger that fits in yourpersonal checkbook and takes the fuss out of making andsticking to a budget.


05_401170-ch01.qxp 7/24/08 12:30 AM Page 22

Step 3: Calculate and AdjustAre your spending habits keeping you in the red? To findout, add up the essentials list and the extras list separately.Subtract the essentials total from your monthly income. Ifyou have money left over, subtract the extras total fromthat amount. If you still have money left over, great! Lookinto a savings or investing plan (talk to your bank or a certi-fied financial planner for help setting up a plan).

If your extras list takes you into negative numbers, startlooking for places to cut back (for example, cancel yournewspaper delivery or eat out once a month instead ofonce a week). You can also trim from the extras list to putmore money toward debt repayment if that’s a high prior-ity in your financial picture.

Create a Monthly Budget 23

05_401170-ch01.qxp 7/24/08 12:30 AM Page 23

24 #4

Breathe Away Tension

As the economy heads south and you tighten yourbudget to keep spending under control, stress and

tension creep into your life. You can’t control the econ-omy, but that’s okay — truly living well is about far morethan money. On the other hand, no matter how goodthings get, stress always leeches the fun out of the goodlife. Breathing properly is one of the simplest and bestways to drain your tension and relieve your stress.Simply by changing your breathing patterns, you can rap-idly induce a state of greater relaxation. If you control theway you breathe, you have a powerful tool in reducingbodily tension and increasing your joie de vivre.

Change the Way You BreatheChanging the way you breathe can change the way youfeel. Here’s one of the best and simplest ways of introduc-ing yourself to stress-relieving breathing:

1. Lie down or sit comfortably, and put one hand onyour belly and your other hand on your chest.

05_401170-ch01.qxp 7/24/08 12:30 AM Page 24

2. Inhale through your nose, making sure thehand on your belly rises and the hand on yourchest moves hardly at all.

3. As you inhale slowly, count silently to three.

4. As you exhale, slowly count to four, feeling thehand on your belly falling gently.

Pause slightly before your next breath.

5. Repeat Steps 2 through 4 for several minutesand whenever you get the chance.

Breathe through an EmergencyBreathing properly is no big deal when you’re lying onyour bed or vegging out in front of the TV. But what’syour breathing like when you’re caught in gridlock, whenyou’re facing down a deadline, or when the stock marketdrops 20 percent? You’re now in a crisis mode. You needanother form of breathing. Here’s what to do:

1. Inhale slowly through your nostrils, taking in avery deep diaphragmatic breath.

Fill both your lungs and your cheeks.

2. Hold that breath for about six seconds.

3. Exhale slowly through your slightly parted lips,releasing all the air in your lungs.

Pause at the end of this exhalation.

4. Now take a few normal breaths.

5. Repeat Steps 1 through 4 two or three times andthen return to what you were doing.

This form of deep breathing should put you in a morerelaxed state.

Breathe Away Tension 25

05_401170-ch01.qxp 7/24/08 12:30 AM Page 25

26 #5

Tense Your Way to Relaxation

The uncertainty of a faltering economy can tie anyonein knots, despite even the best of efforts to keep

things in perspective, set priorities, and take control.Fortunately, one of the better relaxation techniques actu-ally uses tense muscles to your benefit. It derives from amethod called progressive relaxation, or deep musclerelaxation.

This method is based on the notion that you aren’t awareof what your muscles feel like when they’re tensed. Bypurposely tensing your muscles, you’re able to recognizewhat tension feels like and identify which muscles arecreating that tension. This technique is highly effectiveand has been proven to be a valuable tool for quicklyreducing muscle tension and promoting relaxation.

Relax Your Body, Part by PartWhen you have some time, follow these steps for progres-sive relaxation:

1. Lie down or sit, as comfortably as you can, andclose your eyes.

Find a quiet, dimly lit place that gives you someprivacy, at least for a while.

05_401170-ch01.qxp 7/24/08 12:30 AM Page 26

2. Tense the muscles of a particular body part.

To practice, start by tensing your right hand andarm. Begin by making a fist. As you clench yourfist, notice the tension and strain in your handand forearm. Without releasing that tension, bendyour right arm and flex your biceps, making amuscle the way you might to impress the kids inthe schoolyard.

Don’t strain yourself in any of these muscle tens-ing maneuvers. When you tense a muscle group,don’t tense as hard as you can. Tense about 3⁄4 ofwhat you can do. If you feel pain or soreness,ease up on the tension, and if you still hurt, deferyour practice until another time.

3. Hold the tension in the body part for about tenseconds.

4. Let go of the tension fairly quickly, letting themuscles go limp.

Notice the difference in the way your hand andarm feel. Notice the difference in feelingsbetween the sensations of tension and those ofrelaxation. Let these feeling of relaxation deepenfor about 30 seconds or so.

5. Repeat Steps 1 through 4, using the samemuscle group.

6. Move to another muscle group.

Simply repeat Steps 1 through 4, substituting adifferent muscle group each time. Continue withyour left hand and arm and then work your waythrough the major muscle groups listed in the fol-lowing section.

Tense Your Way to Relaxation 27

05_401170-ch01.qxp 7/24/08 12:30 AM Page 27

After you finish relaxing each of these areas, let yourbody sink into an even deeper state of relaxation. Let gomore and more. Mentally go over the sensations you’refeeling in your arms, face, neck, shoulders, back, stom-ach, and legs. Feel your body becoming looser and morerelaxed. Savor the feeling.

Use the Quickie MethodWhen pressed for time, you can use a quickie version ofthe progressive relaxation exercise explained in the pre-ceding section. This technique compresses all the muscletensing and relaxing sequences into one. Think of it asone gigantic scrunch.

In order to do this, you have to master the gradual ver-sion first. The success of this rapid form of relaxationdepends on your ability to create and release muscle ten-sion quickly, skills you master by slowly working throughall the muscle groups individually. Here’s what to do:

1. Sit or lie comfortably in a room that’s quiet andrelatively free of distractions.

2. Tense all the muscle-groups listed here, simultaneously:

• Clench both fists, bend both arms andtense your biceps.

• Lift both legs until you notice a moderatedegree of tension and discomfort.

• Scrunch up your face, closing your eyes,furrowing your brow, clenching your jaws,and pursing your lips.


05_401170-ch01.qxp 7/24/08 12:30 AM Page 28

• Bring your shoulders as close as you can toyour ears.

• Tense your stomach muscles.

3. Hold this total scrunch for about five secondsand then release, letting go of any and all tension.

Let your legs fall to the floor or bed, let yourarms fall to your sides, and let the rest of yourbody return to a relaxed position.

Repeat this sequence at various points throughout your day.

Tense Your Way to Relaxation 29

05_401170-ch01.qxp 7/24/08 12:30 AM Page 29

30 #6

Stretch Away Your Stress

Stretching is one way your body naturally dischargesexcess tension. You automatically feel the need for a

stretch when you wake up in the morning and just beforeretiring at night. But a good stretch can drain away muchof your body’s tension at other times, too. You may bedeskbound or sitting for long periods of time during theday, causing your muscles to tense and tighten. Consideradopting one or more basic stretches and taking astretch-break at various points throughout the day.

Following are two tension-relieving stretches that helpyou drain off a lot of excess tension. They’re simple andshouldn’t evoke much comment or ridicule from friendsor co-workers.

� The Twist: This stretch is great for your upper body.Sitting or standing, put both your hands behind theback of your head, locking your fingers together.Move your elbows towards each other until you feelsome moderate tension. Now twist your bodyslightly, first to the right for a few seconds and thenslowly to the left. When you finish, let your arms fallto your side.

05_401170-ch01.qxp 7/24/08 12:30 AM Page 30

� The Leg-lift: This stretch is good for your lowerbody. Sitting in your chair, raise both your legs untilyou feel a comfortable level of tightness in them.Maintaining that tension, flex and point your toestoward your head. Hold that tension for about tenseconds or so and then let your legs fall to the floor.If doing this with both legs together is a wee bituncomfortable, try it one leg at a time.

Stretch slowly and don’t overdo it. You’re trying to relaxyour muscles, not punish them.

Stretch Away Your Stress 31

Find a local yoga classIf the deep breathing and stretching exercises in this Part appeal to you,consider giving yoga a try. In addition to the benefits from exercise andmeditation, some yoga practices actually focus on things like content-ment and abstaining from an attachment to possessions — two defini-tive steps toward living well, regardless of the economy! If yoga seemstoo trendy or New Age, remember that this practice has endured forthousands of years.

05_401170-ch01.qxp 7/24/08 12:30 AM Page 31

32 #7

Lift a Finger for Self-Massage

With all the stress and turmoil going on in the worldand in your own budget, you could probably use a

good massage to release some tension. Hold onto yourcash and let your fingers do the work.

For Your HandsHold your left palm in front of you, fingers together. Thefleshy spot between your thumb and index finger is a keyacupressure point that should spread a sensation ofrelaxation when massaged. Using your right thumb, mas-sage this spot in a circular motion for a slow count of 15.Switch hands and repeat.

For stress-related fatigue, pinch just below the first jointof your pinkie with the thumb and index finger of theopposite hand. (Pressure should be firm but not painful.)Increase the pressure slightly. Make small circular move-ments in a counterclockwise direction while maintainingpressure. Continue for 20 seconds. Release. Wait for tenseconds and repeat up to five times.

05_401170-ch01.qxp 7/24/08 12:30 AM Page 32

For Your FeetTry this sole-soothing exercise. Take off your socks andshoes and sit comfortably with one leg crossed over theother. (The sole of your foot should be almost facingyou.) With both hands, grasp the arches of your foot andapply pressure, especially with your thumbs. Kneadevery part of your foot (like you would bread dough,using your thumbs and fingers), working your way fromyour heel right up to your toes. Give each of your toes asqueeze. Now massage the other foot in a similar way.

If crossing your legs is more stressful than it used to be,go to the kitchen and get your rolling pin. Sit in a chairand position the rolling pin next to your foot. Gently rollyour bare foot back and forth slowly for two minutes orso. Then try it with the other foot. Now wash the pin. Ifyou don’t own a rolling pin, work with a tennis ball. Placeit under the arch of your bare foot, put some pressure onthat foot, and move the ball backward and forward. Keepthis rhythm going for about two minutes, and then switchto your other foot.

For Your Neck and ShouldersStress most often finds its way to your neck and shoul-ders. To dissipate that tension, take your left hand andfirmly massage your right shoulder and the right side ofyour neck. Start with some gentle circular motions, rub-bing the muscle with your index and middle fingers. Thenfinish with a firmer massage, squeezing the shoulder andneck muscles between your thumb and other fingers.Now switch to the other side.

Lift a Finger for Self-Massage 33

05_401170-ch01.qxp 7/24/08 12:30 AM Page 33

For Your FaceStart by placing both of your hands on your face with thetips of your fingers resting on your forehead and theheels of your palms resting just under your cheeks.Gently pull down the skin on your forehead with the tipsof your fingers while pushing up the area under yourpalms. Rhythmically repeat this movement, contractingand releasing your fingers and palms. You can also trypulling on your ears in different directions.


05_401170-ch01.qxp 7/24/08 12:30 AM Page 34

35#8

Practice Habits of EffectiveStress Managers

The following is a short list of the qualities mostimportant for reducing stress and creating stress

resilience:

� Practice relaxation techniques. You need to knowhow to let go of tension and be able to relax yourbody and quiet your mind.

� Eat right and exercise often. Be careful about whatyou put into your mouth. Engage in some form ofphysical activity regularly during the week.

� Get enough sleep. Try not to burn the candle atboth ends. Get to sleep at an hour that ensures youcan get enough rest.

� Don’t worry about the unimportant stuff. Know thedifference between what’s truly important andwhat’s not. Put things into perspective.

� Don’t get angry often. Avoid losing your temper,but if you do become angry, try to remain in controlof your anger so that it doesn’t become destructive.

� Get organized. Feel a sense of control over yourenvironment. A cluttered and disorganized life leadsto a stressed life.

05_401170-ch01.qxp 7/24/08 12:30 AM Page 35

� Manage your time effectively. Be in control of yourschedule.

� Have and make use of a strong social supportsystem. Spend time with your family, friends, andacquaintances. Have people in your life who listento you and care for you.

� Live according to your values. Make sure that youspend your energy and time on things that aremeaningful to you and that your goals are significantand worthwhile.

� Have a good sense of humor. Laugh at life’s hasslesand annoyances. Don’t take yourself too seriously.

If you realize that you currently employ only some (ornone!) of the habits in this list, don’t worry — you canchange old habits and learn new ones. Managing yourstress isn’t a magical process; rather, it’s one that meansmastering new behaviors and finding new ways of lookingat yourself and your world.


05_401170-ch01.qxp 7/24/08 12:30 AM Page 36

Part II

Bumping Up YourBring-Home

06_401170-pp02.qxp 7/24/08 12:31 AM Page 37

In this part . . .

If you’re thinking of ways to bring more moneyhome because you’ve been laid off or down-

sized, are facing the possibility of being laid off ordownsized, or just want to build a nest egg in caseyour financial situation goes south, you have quitea few options. In addition to finding other work —whether it’s a new job to replace an old one or apart-time job to supplement what you earn now —you can increase your income by changing the wayyou work. Telecommuting or working from home isa viable option for many people. This part examinesthe opportunities available and gives tips on how tocreate and update a resume that’ll get you a secondlook from prospective employers.

06_401170-pp02.qxp 7/24/08 12:31 AM Page 38

39#9

Update and Customize YourResume

When you see a job that you hope has your nameon it, you won’t have time to start from scratch

and write a targeted resume that shows why you’re theone to interview. The answer is to begin building a coreresume — a basic resume that you customize — beforethe pressure hits. Use this resume as a base to spin offtargeted editions when you need to move quickly.Constructing a targeted resume is easier when you followthis three-step game plan.

Step 1: Prepare Your Core Resume

Probe your memory to jot down every factor in yourbackground that you could use to customize a resume,from experience and education to competencies andskills. This draft is your working model, a resume you’llnever submit to an employer but a rich well you’ll drawfrom time and time again. Use as many pages as you need.

07_401170-ch02.qxp 7/24/08 1:10 AM Page 39

Part II: Bumping Up Your Bring-Home 40When you begin drafting your core resume, consider thefollowing four categories of essential information:

� Education: List your highest degree first — type ofdegree, major, school name, and date awarded. Ifyou have a college degree, omit high school or prepschool. If you have a vocational-technical schoolcertificate or diploma that required less than a yearto obtain, list your high school as well.

� Experience: Describe — with quantified achieve-ments — your present and previous positions inreverse chronological order. Include specific jobtitles, company names and locations, and dates ofemployment. Show progression and promotionswithin an organization, especially if you’ve beenwith one employer for eons.

� Skills: Skills today are the heart and soul of job find-ing, and as such, they encompass a variety of experi-ences. In job-search terms, a skill is any identifiableability or fact that employers value and will pay for.That means that “five years” is a skill, just as “wordprocessing” is a skill; employers pay for experience.

� Competencies: A competency-based approach is amethod that focuses on the skills, talents, andbehaviors needed to perform a particular task to acertain standard. Although not all businesses usethis hiring approach, some — usually larger, sophis-ticated employers — do.

07_401170-ch02.qxp 7/24/08 1:10 AM Page 40

Step 2: Research JobRequirements

If you’re responding to a specific advertised job, jot downthe requirements that the ad lists. Don’t confuse the jobduties and the stated requirements. Deal first with therequirements and then see how you can show experienceor education that matches the most important job duties.

When you’re not responding to a specific advertised jobbut are posting your resume in an online database, studymany job ads to figure out the most commonly requestedqualifications for a given occupation or career field.

Step 3: Customize Each Spinoff Resume

After compiling the requirements you must satisfy in atailor-made resume, scour your core resume to seewhether you can add secondary items mentioned in thead that further improve your chances. Then start writing.

Never forget the resume-interview connection. To nabone of the better jobs and to move up the rewards chain,your targeted resume has to attract a decision-makerwho will invite you to an interview to further explain howyou can give that employer precisely what his or herorganization says it wants and needs to succeed. If youremployer wants A, you offer A. If your employer wants B,you offer B.

Update and Customize Your Resume 41

07_401170-ch02.qxp 7/24/08 1:10 AM Page 41

To accomplish this custom-fit hiring, make sure your tar-geted resume convinces the employer that your valueproposition (a buzzword meaning reason for hire) is a per-fect fit for the job, not a maybe fit for the job. Meet asmany of the employer’s requirements as you truthfullycan. Admittedly, doing so isn’t a walk in the park. In aworld growing not only more global but also more com-plex, expect to do some head scratching and creativethinking from time to time.

Part II: Bumping Up Your Bring-Home 42

07_401170-ch02.qxp 7/24/08 1:10 AM Page 42

43#10

Make Your Resume Stand Out

How much are you worth to employers? Whenemployment rates are stagnant and many compa-

nies are freezing or slowing hiring, you want to make sureyour resume inspires employers to answer that questionwith “a lot.” To do so, create a resume that’s a compellingportrait of your strengths and skills.

Don’t Tell It — Sell ItBasic descriptions of what you did on a job are boring.You want to instill excitement! List your backgroundfacts, but make sure you position them as end-user(employer) benefits. To sell your value and your benefitsto an employer who has the power to hire you is to getspecific. Communicate the importance of what you’vedone by using details — numbers, names, achievements,outcomes, volume of sales or savings, and size of con-tracts, for example.

Focus Your ResumeWhen your resume looks as though it’ll collapse underthe weight of a mishmash of jobs unconnected to yourpresent target, eliminate your previous trivial pursuits.

07_401170-ch02.qxp 7/24/08 1:10 AM Page 43

Group the consequential jobs under a heading that saysRelevant Work Experience Summary. If this approachsolves one problem — the busy resume — but createsanother, such as a gaping hole where you removed incon-sequential jobs, create a second, abbreviated work his-tory section that covers those holes, labeling it OtherExperience.

Use KeywordsRecruiters and employers use keywords to search andretrieve e-resumes in databases for available positions.Employers search for keywords — chiefly nouns andshort phrases, but also adjectives and action verbs —when trying to fill a position; they name the essentialhard skills and knowledge needed to do the job.

When you use industry abbreviations (for example, “ROI”for return on investment), spell out the term at least oncein your resume. Even though many systems are smarterthan they used to be, a lot of older technology productsout there won’t get it unless you spell it out.

Massage Your Years ofExperience

Sometimes a job posting calls for a specific number ofyears of experience — say, three years of experience. Ifyou come up short — with only two years of experience,for example — but you know you can do the job, thebasic technique is to work with what you have. Dissectyour two years of experience and then add a statement in


07_401170-ch02.qxp 7/24/08 1:10 AM Page 44

parentheses that says “skills acquired equivalent to threeyears of experience.” The expansion technique doesn’twork every time, but it’s worth a shot.

Address Negative PerceptionsEven when it wasn’t at your initiative, holding five ormore jobs in ten years can brand you as a job hopper.Currently being out of work underscores that impression.Even employers who are guilty of round after round ofemployee dismissals instinctively flinch at candidatesthey perceive to be hopping around. Take pains toreverse that disapproval. When you draft your resume,post a list of negative perceptions on your desk; whenyou’re finished writing, compare your resume with thelist. Offer information that changes negative perceptionsof you as a job hopper.

Make Your Resume Stand Out 45

07_401170-ch02.qxp 7/24/08 1:10 AM Page 45

46 #11

Get Acquainted with NewInterview Trends

Are you having trouble staking out your futurebecause you can’t close the sale during interviews?

Recharge with knowledge of the new trends and changingdevelopments that impact your job interviews.

� Expect new kinds of interviewers. If the last timeyou interviewed you went one-to-one with a singleinterviewer, get ready for a different set of question-ers, like a veteran team of six managers — individu-ally or collectively; a hiring manager (especially intechnical and retail fields) who’s two decadesyounger than you; or someone of an ethnicity andheritage different from yours.

� Be prepared to answer the direct or implied ques-tion, “What can you do for our company immedi-ately?” Because you can’t count on being on the jobmore than a few years — or in contract assignments,a few months — the hiring spotlight lasers in onskills you can use from Day One.

� Be prepared for a video interview. ComputerWebcams make it easy and cheap for an employerand job seeker to see and talk to each other nomatter where each is hanging out — around the

07_401170-ch02.qxp 7/24/08 1:10 AM Page 46

block or around the globe. Video interviews mayalso replace phone screening interviews.

� Focus on fitting in. Disappointed job seekers whoask employers why they didn’t get hired are oftentold they aren’t the best fit for the job. In the work-place, “fit” refers to how an individual fits into acompany’s culture. Instead of losing sleep over a fit-based turn-down, move on. Do better pre-interviewresearch so you don’t waste time on companieswell-known for being a fortress of round holes whenyou’re a square peg.

� Cut the loyalty oath. At some point you’ll be asked,“Why do you want to work here?” The old “I’m look-ing for a home and I’ll be loyal to you forever” state-ments don’t play as well as they once did. Instead ofpledging eternal fidelity, discuss your desire to dothe work. Talk about how you’re driven to funnelsubstantial amounts of productivity into the jobquickly. Talk about wanting to use your superiortechnology skills. Talk about your interest in workthat excites you, work that matters. Talk about workthat — with its combination of work-life balance andstimulating tasks — is too tempting to pass by.

� Revisit the dramatic pause. A pause is effectivebody language and works great in face-to-face inter-views. But in telephone or online video interviewing,dead air time can make you appear dull-wittedrather than contemplative. Exercise judgment inusing the reflective pause as a communications tool.(When you just don’t know the answer immediately,that’s another story; stall by asking for clarification.)

Get Acquainted with New Interview Trends 47

07_401170-ch02.qxp 7/24/08 1:10 AM Page 47

� Polish your storytelling skills. Interviewers ask can-didates to tell them a story of a time when theyreacted to such and such a situation. How did youhandle an angry customer? Can describe an exampleof a significant achievement in your last job? Themore success stories you can drag in from yourpast, the more likely those interviewers using thisapproach will highly rate your chances of achievingequivalent success in the future.

� Learn new lines for small-business jobs. As layoffsand downsizing increase, prime-timers are discover-ing that the small company sector is where theaction is for them. Interviewers at big companiesand small companies have different agendas.Emphasize different aspects of your work personal-ity than those you emphasize when interviewing fora big company.


07_401170-ch02.qxp 7/24/08 1:10 AM Page 48

49#12

Stand Out in an Interview

These ten super tips are sure to make the hiring godsfavor you at job interviews. Read on to get hired:

� Be prepared. Preparation makes all the difference inwhether you get the best offers as you face intensescrutiny, probing questions, and employers who areafraid of making hiring mistakes. You must showthat you’re tuned in to the company’s needs, thatyou have the skills to get up to speed quickly, andthat you’re a hand-in-glove fit with the company.Fortunately, never before has so much informationabout companies and industries been so easilyaccessible, both in print and online.

� Distinguish screening from selection interviews.The purpose of the typical screening interview is toweed out all applicants except the best qualified.Screeners can reject, but they can’t hire. During thisinterview, be pleasant and neutral. Volunteer nostrong opinions. Raise no topics, except to reinforceyour qualifications. If you make it past the screeninginterview, you’re passed on to a hiring manager orpanel who makes the selection. At this interview,move from neutral into high gear if the person doingthe interview will be your boss or colleague. Nomore bland behavior — turn up the wattage on yourpersonality power. This is the best time to find out

07_401170-ch02.qxp 7/24/08 1:10 AM Page 49

whether you’ll hit it off with the boss or colleaguesor fit into the company culture.

� Verify early what interviewers want. Almost assoon as you’re seated, ask the interviewer todescribe the scope of the position and the qualifica-tions of the ideal person for that position. The goalhere is to confirm your research. If you’re wrong,you must know immediately that you need to shiftdirection. Confirming your research or gaining thisinformation on the spot is the key to the entire inter-view. This technique permits you to focus on thefactors on which the hiring decision is made, with-out taking verbal detours that don’t advance yourcandidacy.

� Connect all your qualifications with a job’srequirements. If a quick glance at your notesreminds you that the interviewer missed a require-ment or two listed in the job posting when describ-ing the position’s scope and the ideal person for it,help the interviewer by tactfully bringing up themissing criteria yourself.

� Master a one-to-two-minute commercial aboutyourself. Almost certainly you’ll be asked torespond to some version of the “Tell me about your-self” question. For your answer, memorize a shortdescription of your background (education, experi-ence, and skills) that matches your strengths to thejob. After briefly relating the facts of your back-ground, add a sentence or two about your curiosity,commitment, and drive to build mountains atopyour already good skills base. A few well-chosenwords enliven a dry recitation of facts with a splashof your personality.


07_401170-ch02.qxp 7/24/08 1:10 AM Page 50

� Allow the interviewer to direct the improv. Somejob search advisers seem to suggest that you takecharge of the interview, directing the discussion inyour favor. Not such a hot idea. Wrestling the inter-viewer for control can easily backfire when youappear to be usurping the interviewer’s prerogative.

� Try not to talk money until you know they wantyou. When the salary question comes up at the begin-ning of an interview, say that money isn’t your mostimportant consideration (and it really shouldn’t be atthis point). Only when you know the scope of theposition and its market value — and that the com-pany wants to hire you — are the stars in alignmentto bargain in your best interest.

Stand Out in an Interview 51

07_401170-ch02.qxp 7/24/08 1:10 AM Page 51

52 #13

Nail the Video Interview

Video interviewing (a form of videoconferencing) is alive, two-way electronic communication that permits

two or more people in different geographic locations toengage in face-to-face visual and audio exchange. Milesseparate them: sometimes few, sometimes many, andsometimes oceans. As companies look to trim expensesassociated with interviewing and hiring, video interview-ing is becoming more common.

The content of a video interview is much the same asthat of an in-person interview, but the execution differs.For example, lag time occurs when data is compressedand sent from one location to another. Remember toallow for the delay and not step on the interviewer’slines, and don’t be surprised if the interviewer inadver-tently cuts you off in mid-sentence. In addition, you mayfeel performance pressure. When it’s your turn to speak,you have very little time to look away, down, up, or side-ways to process your thoughts. When the green lightgoes on, the pressure on you is somewhat like that on acontestant at a quiz show: talk or walk.

Here are some tips to help you gracefully navigate yourway through a video interview:

07_401170-ch02.qxp 7/24/08 1:10 AM Page 52

� Send materials for show-and-tell in advance if theinterviewer wants to ask questions about anupdated resume or project.

� Run a technical check to make sure all video equip-ment is functioning properly.

� Pay attention to your appearance.

� Keep your movements calm.

� Introduce yourself simply and remember the sounddelay.

� Look directly at the camera as often as possiblewhen speaking.

� Let the interviewer end the interview.

� Sign off with a virtual handshake. You can say some-thing as simple as “Thank you for interviewing me. Ienjoyed it. Let’s talk face to face very soon.” Whenyou’re in a professional setting, push the mutebutton and leave the room. When you’re at home,mute the mike and close the camera.

Nail the Video Interview 53

07_401170-ch02.qxp 7/24/08 1:10 AM Page 53

54 #14

Make the Most of a PhoneInterview

Almost everyone knows someone who’s been con-tacted by a recruiter for a screening interview.

Sometimes the recruiter purposely tries to catch you offguard, hoping surprise strips away the outer layers ofyour preparation, exposing genuine, unrehearsedthoughts and feelings. These recruiters also see unantici-pated calls as useful for measuring your ability to thinkon your feet. Because most people don’t prepare for over-the-phone screening interviews as rigorously as they pre-pare for face-to-face meetings, the casualty fallout isheavy.

If you don’t like surprises, schedule an appointment foryour phone interview. You don’t want to answer ques-tions on the fly when the call comes in because you won’tbe prepared and you won’t do your best. Instead, sayyou’re walking out the door to a meeting across town andwill call back as soon as you can.

Before your phone interview, make sure you have all youressentials where you can access them easily during theinterview. Must-haves include your current resume, a listof your professional accomplishments and brief storiesthat illustrate your qualifications, background information

07_401170-ch02.qxp 7/24/08 1:10 AM Page 54

on the employer, questions about the company and posi-tion, and a calendar with all scheduled commitments andopen dates.

When the time comes for your phone interview, followthese tips for optimal success:

� If you have a home office, use it. If not, take yourphone into a quiet room stocked with all your inter-view essentials.

� Gather essential information from the caller.

� Don’t rush or drone on.

� Be a champion listener.

� Get specific.

� Punt the salary question. When the phone screenerasks how much money you want, evade the questionfor now. Wait until a face-to-face interview to talkmoney (see Tip #12, “Stand Out in an Interview,” fordetails).

� Push for a meeting. As the call winds to a close, gofor the prize: “As we talk, I’m thinking we can betterdiscuss my qualifications for [position title] inperson. I can be at your office Thursday morning. Is9:30 good, or is there a better time for you?”

When the interviewer agrees but can’t set a specifictime, simply suggest when you’re available and askwhen would be a good time to follow up. What youwant is an in-person meeting. Assume you’ll get itand give the interviewer a choice as to the time.

Make the Most of a Phone Interview 55

07_401170-ch02.qxp 7/24/08 1:10 AM Page 55

56 #15

Look for Good Jobs Online

The Internet makes uncovering hoards of job opportu-nities easier than ever; the trick is to find the right

ones for you. As you launch your job-finding campaign,start with vertical job search engines as a destination foryour targeted resumes; if you don’t seem to be scoringwinners, add general and niche job boards.

Use Vertical Job Search EnginesVertical search engines — also called verticals or VJSEs oraggregators — are the job seeker’s new best friends, andthey’re changing the online recruitment game in dramaticways. You can think of VJSEs as “Google for jobs.” That is,the verticals work as a search engine, except they searchonly for job listings.

With verticals, you go to one place and see virtually allthe jobs that fit your personal criteria on the Internet.The best-known verticals include the following:

� SimplyHired.com

� Indeed.com

� Jobster.com

07_401170-ch02.qxp 7/24/08 1:10 AM Page 56

� GetTheJob.com

� Yahoo! HotJobs (hotjobs.yahoo.com)

Here are the general steps you’re likely to follow whenusing a vertical search engine:

1. Create a personal account.

2. Decide how often to receive the jobs: daily,weekly, and so on.

3. Set preferences indicating which jobs you’reshown.

4. Become familiar with related options on thevertical site.

5. Narrow your search.

6. Track and save your searches.

7. Upgrade to an advanced search if you need it.

Check the Job BoardsIf you’ve been in the job market during the past 15 yearsor so, you probably know that a job board is a Web sitewhere you can look for a job. Employers pay job boardsto post their open positions. Job seekers typically viewjob listings for free.

You can apply through a job board for specific positions,or you can post your resume in the board’s resume data-base. When you mouse aboard a job board, you cansearch for job listings by career field, occupation, jobtitle, location, and job detail keywords. The emphasis ison local job markets because most people won’t move fora job unless they have little choice.

Look for Good Jobs Online 57

07_401170-ch02.qxp 7/24/08 1:10 AM Page 57

You find job boards in two basic flavors:

� General job boards, such as CareerBuilder.com andMonster.com, cover all kinds of jobs.

� Specialty (or niche) job boards cover a specificgroup of jobs, according to factors like industry(EducationAmerica.net), geography(AtlantaRecruiter.com), or job-seeker qualifications(MBACareers.com).

Job boards are established hunting grounds for verticaljob search engines. You can, of course, skip the verticalsif you prefer and go straight to a job board. Many peopledo. Go to www.topjobsites.com to get the latest siterankings, which are published monthly.


07_401170-ch02.qxp 7/24/08 1:10 AM Page 58

59#16

Look into Federal Jobs

If you’ve ever thought about looking into a federal job,time’s wasting. Uncle Sam’s 1.8 million civilian work-

force (not counting postal service employees) averages20,000 vacancies every day. Benefits are handsome: greathealth insurance, decent retirement plans, and flexibleleave. Annual pay raises — often 3 to 4 percent — areautomatic. You may not even have to relocate; many fed-eral jobs exist in locales across America and even over-seas. The number-one way to spot a federal job that mayinterest you is to visit the official USA Web site(www.usajobs.gov). You can even search by salary.

As you pursue a federal job, keep in mind that federalresumes tend to be longer and require information nottypically found on private-sector resumes. In addition, federal language is more bureaucratic than that of private-sector documents. Read the federal vacancy announce-ments (recruitment advertisements) carefully to get itright, and pay special attention to the qualifications andKSA (knowledge-skills-abilities) requirements.

07_401170-ch02.qxp 7/24/08 1:10 AM Page 59

60 #17

Prepare for a Career Change

As companies trim their workforces and more andmore jobs are farmed out to contractors or sent off-

shore, even once stable and reliable positions are nolonger so stable or reliable. If you’ve built your career in afield that’s vanishing and now find yourself in the marketfor a job, the answer may be to change careers. Making acareer change isn’t the easiest thing to do, but it may bethe smartest. To make the change, follow this advice:

� Connect with others in your intended field. Whenyour change is voluntary, at least six months inadvance of your leap, join a professional associationof members in the career field or industry whereyou want to go. When your change is involuntaryand you’re suddenly left high and dry, scramble toassemble a skeleton personal network of peoplewho can guide you into your intended field — andbeef up that network as fast as you can. Makefriends. Find out who’s who and what’s happeningwith professionals who can connect you withemployment. Ask what you should read and whichworkshops you should attend. Ask whether you canvisit a professional’s workplace as an observer.

� Educate yourself. Seek out short-term certificateprograms and workshops offered during industryconferences, as well as those available locally. If youstudy online, get the scoop on pluses and pitfalls

07_401170-ch02.qxp 7/24/08 1:10 AM Page 60

about distance learning. One starting spot:www.geteducated.com.

� Bone up on the industry. Even if you’re a nonacade-mic type who always sneaked light rubbish reads orsports sections into your study halls, you really can’tafford to skip hard-core research on your proposeddestination at this time in your life. Those greenerpastures sometimes bleach out when somethingabout the work isn’t what you expect or can do well.

� Talk the talk. Learn the lingo of prospective newcolleagues. You’ll seem like one of them already.

� Make the experience connection. The bridge youuse to join the old with the new must be rational andreasonable. Your qualifications have to come fromsomewhere — skills you already possess, volunteerwork, part-time jobs, training, hobbies, and so forth.Strive to present a believable relationship betweenyour qualifications and the career you’re targeting.

� Accentuate the positive. Don’t say you hope tochange careers because there are no more jobs inyour field. As in any job search, you’re movingtoward a preferred future, not running away from abad spot or a toxic boss.

� Tell true stories. Expect to be asked the same kindsof questions that new graduates often face, such assome version of “Why shouldn’t we hire someonemore experienced in this line of work?” When youwork out your answers, remember to use story-telling — that is, to back up your claims of superiorqualities with true examples of achievement.

� Take inventory of your core skills and knowledge.Sort through to see which skills will cross over to adifferent industry or career field. Push them to thefront of your memory where you can find and trans-late them as needed.

Prepare for a Career Change 61

07_401170-ch02.qxp 7/24/08 1:10 AM Page 61

62 #18

Figure Out What You ReallyWant to Do

As in finding a mate, choosing a career shouldinvolve both your head and your heart. You may

have a list of potential careers crowding your brain, butwhich of those makes sense? If you’re like most careersearchers, you’re not sure. Answering these questionscan help you figure it out:

� What is your worklife mission statement? In one sen-tence, describe what you most want to accomplish.If that suggests a career or a career must, write itdown.

� Is there anything you absolutely must have in yournext career? Think of these as the (almost) nonnego-tiable items, things like a minimum salary, a presti-gious job title, the opportunity for self-expression, aspecific location, short training time, and so on.

� To be successful and satisfied at work, how do youwant to spend the bulk of your workday? Do youwant to spend it speaking one-on-one or to groups?How about reading, writing, or working with data,numbers, or computers? Do you want to work byyourself? Spend your time convincing people ofsomething? Work with your hands?

07_401170-ch02.qxp 7/24/08 1:10 AM Page 62

� Describe your dream workday. Does that suggest acareer must or even a career? Think what this daywould look like from the moment you get up untilthe moment you go to sleep.

� What do you want your life to look like ten yearsfrom now? Does that suggest the sort of career youshould pursue?

� Do you have specific expertise that you know youwant to use in your career?

� What are your peak accomplishments?

� Write about the last two or three times you felt asurge of energy at work. Does that suggest a career?

� What do you find easy that many other people findhard? Many people aren’t sure what their best skillsare. The government-sponsored Skills Profiler mayhelp (it’s free at www.careerinfonet.org/acinet/skills/default.aspx).

� What have people complimented you on that mayhave career implications? For example, have theysaid, “How can you stay so calm in that situation?”or “You wrote all that in an hour?”

� What are you passionate about?

� What is/was your favorite subject in school?

� If you wrote a book, what would it be about? What doyou most enjoy talking about? The answers to thesequestions may suggest a possible career for you.

� Can you think of a type of organization that you’dlove to work for?

� Is there a certain type of person you definitely wantto work with?

Figure Out What You Really Want to Do 63

07_401170-ch02.qxp 7/24/08 1:10 AM Page 63

� What career do your parents, partner, or closefriends think you should pursue?

� If you didn’t care what your family and friendsthought, what career would you pursue?

� What career appeals to you that represents a dra-matic change from what you’re currently doing?Sometimes, what you need more than anything is achange.


07_401170-ch02.qxp 7/24/08 1:10 AM Page 64

65#19

Persuade Your Organization toLet You Telecommute

Telecommuting can mean big savings. Consider theexpenses associated with a typical workday that

would either vanish or be greatly reduced if you workedfrom home: commuting costs (including gas, tolls, and soon), dining expenses (breakfast from a drive-thru, coffeeduring your break, lunch, trips to the snack machine),childcare expenses, and other expenses like dry-cleaningfor your work clothes. This is, admittedly, a most unsci-entific guesstimate. But if you’re currently working out-side your home, track just one week’s worth of your ownin-office expenses and add them up on Saturday. The totalmay surprise you.

The big hitch, of course, is getting permission to stayhome. You may have the perfect job for telecommuting.You may have the perfect home-office setup. The benefitsto your company may be impossible to deny. And youmay still wind up with a nonnegotiable no for an answer.You can, however, stack the deck in your favor.Telecommuting, without a doubt, is a win-win arrange-ment, in which both employer and employee benefit. Usethe following information to help your boss see why.

07_401170-ch02.qxp 7/24/08 1:10 AM Page 65

A corporation has human characteristics. Before it makesa major change, it wants to know, “What’s in it for me?”Don’t expect to get anywhere if your only answer is “ahappier employee.” Fortunately, that doesn’t have to beyour only answer. One recent survey, sponsored by AT&Tand conducted by the International Telework Association& Council (ITAC), found that each telecommutingemployee saved his or her respective employer an aver-age of more than $10,000 a year by reducing absenteeismrates, saving the business money on recruitment andreplacement, lowering facilities costs, and increasing productivity.

Although this general information is a big help when youset out to sell your boss on the benefits of telecommut-ing, you ultimately need to show how telecommuting canbenefit your particular company, your particular depart-ment, and your particular job:

� Examine how your telecommuting can help yourorganization reach its specific goals. For example,if part of your company’s mission is to provideexcellence in serving its customers (a popular goalthese days), working at home may enable you todeal with customer queries and complaints atunusual hours. This ability can be especially usefulif your firm has overseas clients whose workday dif-fers from yours.

� Do a cost/benefit analysis to compare what yourorganization will spend with what it’ll save byallowing you to telecommute. The idea is to quan-tify some of those soft numbers and to demonstrateto your boss (and possibly upper management)exactly why telecommuting is good for business.


07_401170-ch02.qxp 7/24/08 1:10 AM Page 66

� Demonstrate that telecommuting will work foryour job. When you can demonstrate that telecom-muting will benefit your organization, your next taskis to prove that it can be done by someone in yourjob — in other words, you. Begin by researchingyour own company’s history with telecommuting.Your company may already have a telecommutingpolicy in place, in which case you simply have todemonstrate that you fit within its parameters. Thenlook outside your company to your main competi-tors and other companies in your field to seewhether they allow telecommuting among theiremployees. Finally, find out whether others in yourparticular profession are telecommuting.

Persuade Your Organization to Let You Telecommute 67

07_401170-ch02.qxp 7/24/08 1:10 AM Page 67

68 #20

Find Telecommuting Work

If your current job isn’t compatible with telecommut-ing, or if your employer simply won’t go for it, you

may want to consider looking for a telecommuting job,particularly if you’re dissatisfied with your current position.

Telecommuting JobsWhat kinds of jobs are available for telecommuters? Thevariety is huge and growing all the time. The following listprovides a few of the jobs in which telecommuters areworking on a remote basis today:

AdvertisingCopywriter

Animal Foster HomeCoordinator

Business Consultant

Business-to-Business MaterialsBroker

Customer ServiceRepresentative

Fact Checker

Federal Government Worker

Graphic Artist

Meeting Planner

07_401170-ch02.qxp 7/24/08 1:10 AM Page 68

Job-Hunting for TelecommutersWhere do you search for your new telecommuting job?These days, many people conduct their job searches onthe Web. It’s is a great place to find a job, and it can be aparticularly good source for telecommuting positions.But remember, it’s far from the only source. Don’t forgetmore traditional sources of jobs — and less traditionalones, too.

Search the WebFinding the listings for telecommuting jobs on a generaljob site may take more work than it would at a specifictelecommuting job site. On the other hand, you’ll proba-bly find a wider assortment of jobs at a general site. Hereare a few of each to choose from:

Find Telecommuting Work 69Mutual FundManager

Programmer

Public RelationsRepresentative

Reporter

Researcher

SalesRepresentative

Stockbroker

Technical Support Person

Telephone Operator

Transcriptionist/Typist

Translator

Travel Agent

07_401170-ch02.qxp 7/24/08 1:10 AM Page 69

� Telecommuting Jobs: www.tjobs.com

� Monster.com: www.monster.com

� Workaholics4Hire: www.Workaholics4Hire.com

� Yahoo! HotJobs: www.hotjobs.yahoo.com

� The Wall Street Journal: www.careers.wsj.com

Look for telecommuter-friendlycompanies

Where can you find telecommuter-friendly companies?June Langhoff’s Web page (www.junelanghoff.com), theInternational Telework Association and Council’s (ITAC)homepage (www.workingfromanywhere.org), and theTelework Coalition’s home page (www.telecommute.org)are good places to start.

Also check out government jobs (see Tip # 16, “Look intoFederal Jobs). Federal government mandates encouragetelecommuting work arrangements, and many state andlocal governments are following the trend. Governmentshave a vested interest in combating air pollution, trafficcongestion, and urban overcrowding. Telecommutingaddresses all three problems.

Turn a traditional job into atelecommuting job

Do you have a former employer who’s eager to hire youback? A local company that can really use your services?A job you know is a perfect fit and that you’re sure you


07_401170-ch02.qxp 7/24/08 1:10 AM Page 70

can do successfully as a telecommuter? Don’t turn yourback on a good job prospect just because your prospec-tive boss assumes you’ll be working onsite. You don’tknow that telecommuting is out of the question for thisjob until you actually ask.

Turn contract work into atelecommuting job

Many telecommuters start out doing contract or free-lance work for the organizations that eventually hirethem to fill staff positions. This transition is often easierto make than the one from onsite employee to telecom-muter. This solution isn’t right for everyone: Being a con-tract worker can be difficult, and not all jobs lendthemselves to working this way. But it can be an excellentway to get your foot in the door on your way to atelecommuting position.

Find Telecommuting Work 71

07_401170-ch02.qxp 7/24/08 1:10 AM Page 71

72 #21

Consider Self-Employment

You live in an era in which highly paid, secureemployee jobs are increasingly reserved for super-

stars. For everyone else, self-employment may be a morelikely route. Do any of these self-employment categoriesexcite you?

� Distributing the work of creative people: Examplesinclude being an agent for performers or artists,being a film distributor, or owning an online artgallery.

� Replicating a successful business in a different geo-graphic area: For example, opening a New York–stylepizza place in the South or selling previously best-selling computer equipment in developing countries.

� Being self-employed in a high-profit-margin, nichefield that has little competition: For example, sellingused parts for 18-wheel trucks.

� Paying $10,000 to $100,000-plus to be shown how torun a particular business, step by step (buying anexisting business or franchise)

� Turning people’s complaints into a business thatyou can start

07_401170-ch02.qxp 7/24/08 1:10 AM Page 72

� Converting a hobby or personal interest into a business

� Finding a product or service that you want to sell

� Creating a template for a difficult-to-stage event andreplicating it for different customers: An example is staging fundraising auctions for nonprofit organizations.

� Starting a grungy business, which means you havefew competitors: Examples include commercialbathroom maintenance, hazardous waste disposal,and high-voltage electrical work. (Those aren’texactly cool careers, but sometimes making bigmoney in a mundane career feels cooler thanmaking chickenfeed in a cool career.)

But not everyone has what it takes. What about you?These questions can help you decide:

� Do you like being in charge?

� Are you flexible?

� Can you get things done?

� Are you good at solving real-world problemsquickly?

� Are you persistent?

� Do you communicate well?

� Are you willing and able to market and sell?

If you didn’t honestly answer yes to the preceding ques-tions but are still eager to consider self-employment, youmay want to work as an assistant to a successfully self-employed person. You’ll either acquire the skills andmindset you need or realize that you’re wiser to beemployed by someone else.

Consider Self-Employment 73

07_401170-ch02.qxp 7/24/08 1:10 AM Page 73

74 #22

Get Acquainted with Home-Based Businesses

If employment options look bleak outside your home,maybe the answer is inside your home: Consider a

home-based business. Owning your own home-based busi-ness may be the most rewarding experience of your entirelife. And not just in a financial sense (although many home-based businesspeople find the financial rewards to be sig-nificant) but also rewarding in the sense of doing the workyou love and having control over your own life.

Starting and running your own home-based businessoffers these advantages:

� You’re the boss. For many owners of home-basedbusinesses, this reason is enough to justify makingthe move out of the 9-to-5.

� You get all the benefits of your hard work. Whenyou make a profit, it’s all yours. No one else is goingto try to take it away from you (except, perhaps, thetax man).

� You have the flexibility to work when and whereyou want. Perhaps your most productive timesdon’t coincide with the standard 9-to-5 work sched-ule that most regular businesses require theiremployees to adhere to.

07_401170-ch02.qxp 7/24/08 1:10 AM Page 74

� You don’t have to deal with as many distractions.You may find that — because interruptions from co-workers are no longer an issue and the days of end-less meetings are left far behind — you’re muchmore productive working in your workshop than ina regular office.

� You get to choose your clients and customers.When you own your own business, you can fire theclients you don’t want to work with. Sounds like fun,doesn’t it?

� You can put as much or as little time into yourbusiness as you like. You can decide whether youwork for only a few hours a day or week or on a full-time schedule.

These reasons to be on your own are just the tip of theiceberg. When you add it all up, you’re left with one fun-damental reason for owning your own home-based busi-ness: freedom.

Admittedly, starting a home-based business isn’t foreveryone. In fact, for some individuals, it can be a big mis-take. If, however, you have an entrepreneurial spirit andyou thrive on being independent and in charge of yourlife, a home-based business may be just the thing for you.

As you review potential business opportunities, be awareof your own talents, mission, or passion, and keep themforemost in your mind, because your success will bedirectly proportional to the motivation that you bring toyour work. If you’re a grand hand in the kitchen, forexample, you can become an sales associate for a busi-ness (like the Pampered Chef) that sells its wares throughhome-based consultants; you can start a meal servicethat sells prepared meals to busy families in your area; oryou can launch your own catering company.

Get Acquainted with Home-Based Businesses 75

07_401170-ch02.qxp 7/24/08 1:10 AM Page 75

76 #23

Get New-Business Cash Flowing

Every new business starts at the beginning. No matterhow much experience you have in your current job

or how many other businesses you may have started inthe past, when you create a new home-based business,you’re starting from scratch. The faster you get cashcoming into your business, the better. If you’re stillemployed when you start your home-based business, thesooner you’re able to leave your 9-to-5 job behind. And ifyour 9-to-5 job left you, the sooner you’ll be able tobreathe a bit easier.

Start Part-TimeFew businesses — home-based or otherwise — bring inall the money necessary to get them off the ground andkeep them going for a prolonged period of time within thefirst six months of operation. You need a lot of cash —from a current job, your spouse’s or partner’s job, sav-ings, loans from friends or family or a bank — to keepboth your business and your personal life going until thebusiness generates enough revenue to take over.

07_401170-ch02.qxp 7/24/08 1:10 AM Page 76

Although you have to decide for yourself exactly whatschedule to follow while transitioning into a home-basedbusiness, unless you’re unemployed or retired, start yourbusiness on a part-time basis while you’re still holdingdown your regular full-time job.

Finance Your Business withStartup Funds

It takes money to start a business. By lining up sources ofstartup funds, you’re able to ease the financial entry intoowning your own home-based business. There are proba-bly more potential sources of startup funds than you canever imagine. But where does this money come from? Thefollowing list gives several suggestions:

� Personal savings

� Credit (these options include a home equity line ofcredit, loans from friends and family, loans frombanks or credit unions, credit cards, and microloanplans)

� If you use a credit card for your business, get onededicated solely to business expenses. You’ll havean easier time figuring your taxes for the year.

� Selling personal assets (such as a boat, extra vehi-cle, camper, and so on)

� Bartering (Craig’s List, www.craigslist.org, is agreat place to give bartering a try.)

� Disability grants

� Life insurance policies

Get New-Business Cash Flowing 77

07_401170-ch02.qxp 7/24/08 1:10 AM Page 77

� Local seed-money funds (such as one sponsored bythe Amarillo Economic Development Center)

� Reduced tax withholdings

Turn Your Employer into YourFirst Client

If you’re really good at what you do, what better way toget your business off the ground than to do work for yourcurrent employer on a contract basis? Not only will youremployer have the benefit of your expertise while con-tracting with a known entity, but you can also developyour business while working with people you alreadyknow, using systems and procedures you’re already famil-iar with.

Clearly separate yourself from your former employer asan independent contractor instead of continuing to workin the role of employee. If you don’t make this distinctionclear, the IRS may disallow any tax deductions you takefor your home-based business.


07_401170-ch02.qxp 7/24/08 1:10 AM Page 78

79#24

Steps to Take before Leaving Your Job

As soon as you’re consistently earning enoughincome from a part-time business to cover your

bare-minimum living and business expenses, you’re readyto make a full-time commitment to your business. Beforeyou turn in your resignation, however, take the five fol-lowing steps:

� Check when any company benefit plans you havewill vest or increase in value. If you have a 401(k)or other retirement plan to which your employerhas been contributing, it may not be fully availableto you until you’ve completed a particular numberof years of service. Checking this information mayhelp you determine the best time to resign. It’d trulybe a shame, for example, if you quit two weeksbefore the value of your retirement benefits was setto jump from 80 to 100 percent.

� Find out when you can expect to receive anybonus money or profit sharing. You may, for exam-ple, be slated to receive an annual performancebonus or profit sharing a month after the end of thecompany fiscal year. This information can help withthe financial planning for your business.

07_401170-ch02.qxp 7/24/08 1:10 AM Page 79

� Get all annual health exams and routine proce-dures done, and fill all prescriptions, while youand your family are still covered by your med-ical/dental/vision insurance. Check to see whetheryour group coverage can be converted to an individ-ual policy at favorable rates (some can be, althoughbe very careful about changes in coverage, co-pays,and deductibles that may actually end up costingyou much more money in the long run) or whatother health coverage options are open to you.

Don’t forget that if you work in the United States,you’re likely covered by COBRA (the ConsolidatedOmnibus Budget Reconciliation Act of 1985), whichrequires your employer to allow you to continueyour current group health coverage for a period of18 months or more at the same rate (probably subsi-dized by the company) as all other employees ofcomparable coverage.

� If you own a house, take out a home equity line ofcredit before leaving your current job. Having aline of credit to draw upon is invaluable during thefirst two years of your new business, and yourchances of getting approved for it are much greaterwhile you’re employed in a regular job. That’s right — after you leave your job, you probably won’tqualify for a line of credit or other loans for yourbusiness until your business has been successful fortwo or more years.

� Pay off or pay down the balance on your creditcards while you still have a steady job. This helpsyour credit rating (always a good thing) and pro-vides you with another source of potential funds tohelp you finance various startup costs (and depend-ing on the nature of your business, you may haveplenty of those!).


07_401170-ch02.qxp 7/24/08 1:10 AM Page 80

Don’t make your announcement or submit your resigna-tion until you’re really, actually, for sure ready to go.Some companies are (sometimes justifiably) paranoidabout soon-to-be former employees’ stealing ideas, pro-prietary data, or clients. This can make for a very hastyexit, with a personal escort, when you do resign.

Steps to Take before Leaving Your Job 81

07_401170-ch02.qxp 7/24/08 1:10 AM Page 81

82 #25

Take Tax Deductions onHome-Based Businesses

Home-based businesses pay self-employment tax(the government’s way of collecting payments for

Social Security and Medicare from the self-employed),state and federal income taxes, excise and propertytaxes, and miscellaneous local taxes or assessments.With all these taxes, you can easily be turning over 30 to50 percent or more of your business’s revenues to thegovernment. Fortunately, you can take a number ofdeductions — some significant — for your home-basedbusiness.

Home-Office DeductionFor many, the home-office deduction is a major financialincentive to start businesses at home, and it can have asignificant and positive effect on a home-based business’sfinancial position (as well as the personal financial situa-tion of the owner). For many home-based businessowners, the ability to take the home-office deduction lit-erally means the difference between success and failure.

07_401170-ch02.qxp 7/24/08 1:10 AM Page 82

The beauty of the home-office deduction is that it allowsyou to deduct the costs of operating and maintaining thepart of your home that you use for business. And it doesn’tmatter what kind of home you live in. Whether you live ina single-family home, a condominium, a commercialbuilding, or even a houseboat, if you meet the IRS’s crite-ria for the home-office deduction, you’re eligible to takeit.

With a home-office deduction, you’re allowed to deductnot only your normal business expenses (paper, pencils,phone calls, and so on), but also a portion of the indirectexpenses related to your entire home! Examples ofcommon indirect expenses are rent or mortgage, securitysystem, housekeeping, and utilities.

To determine the total amount of indirect expenses youcan deduct, calculate the percentage of your homedevoted to your home office. If your home office takes up20 percent of your homes space, you can deduct 20 per-cent of your home’s indirect expenses.

Consult with an accountant, tax planner, or other tax pro-fessional before you take the home-office deduction. Therules are complicated, and the penalties for doing thewrong thing can be significant. For more information ondeductions for your home-based business, check out IRSPublication 587: Business Use of Your Home (to locate thispublication, enter “IRS Publication 587” in your searchengine or go to www.irs.gov/formspubs).

Other Important Tax DeductionsAside from the home-office tax deduction, home-basedbusinesses are allowed to deduct a variety of other

Take Tax Deductions on Home-Based Businesses 83

07_401170-ch02.qxp 7/24/08 1:10 AM Page 83

business expenses. As you may imagine, a home-basedbusiness owner can legally deduct lots of different thingsfrom his or her taxes. Examples of legal deductionsinclude postage, auto expenses, Internet access, businessmeals and entertainment, retirement plans, interest pay-ments on business credit cards, health insurance, andoffice supplies and furniture.

To be deductible, the Internal Revenue Code specifiesthat expenses must be ordinary and necessary for theoperation of your business. So although the purchase of avintage 1959 sunburst Gibson Les Paul electric guitar for$150,000 may be ordinary and necessary (and thus anallowable deduction) for a professional musician, it likelywouldn’t fly for a home-based software designer — infact, it’d surely sink like a lead balloon.


07_401170-ch02.qxp 7/24/08 1:10 AM Page 84

85#26

Ensure the Survival of YourHome-Based Business in

Tough Times

Due to your business’s inherent smallness, you maynot have enough clients to manage the financial

roller coaster that can result when a customer goes bank-rupt, puts you on a slow-pay plan, or switches vendors.Good planning can help you see far enough out on the hori-zon to anticipate the most serious financial shortfalls —and then take steps to avoid them — but anticipating allthe bumps in the road and missing them when theyarrive is impossible to do. Use the tips here to help youweather the storm and emerge stronger than ever:

� Save for a rainy day.

� Manage your cash flow.

� Keep in touch with your customers.

07_401170-ch02.qxp 7/24/08 1:10 AM Page 85

� Push your clients to pay their bills. You can figurewhich accounts are running behind by monitoringreceivables — the money owed to your company byyour clients and customers. QuickBooks and otherbusiness accounting programs have built-in receiv-ables aging reports that make the task easy. Andwhen you discover that one of your client’s pay-ments is overdue, act immediately — especiallywhen the amount owed is substantial.

� Minimize expenses.

Be careful about exactly which expenses you cut. Donot cut expenses that’ll bring more money into yourbusiness; instead, you may need to increase them.

� Offer a special promotion.

� Subcontract for others.


07_401170-ch02.qxp 7/24/08 1:10 AM Page 86

87#27

Choose between Itemized andStandard Deductions

Too many people overpay on taxes because they takethe standard deductions when itemizing would be

better, or they itemize their deductions when the stan-dard deductions would’ve been more advantageous. Howdo you choose which route to take? The answer is easy:Itemize your deductions if your total deductions are morethan the standard deduction. For each dollar thatexceeds the standard deduction, you’ll reduce your tax-able income by that amount. Otherwise, take the stan-dard deduction.

Note: If you’re 65 or older and/or blind, your standarddeduction will be even higher than what you see here:

Filing Status Standard Deduction

Individual taxpayer $5,450

Married filing jointly $10,900

Head of household $8,000

07_401170-ch02.qxp 7/24/08 1:10 AM Page 87

Itemized deductions are limited or phased out if youradjusted gross income (AGI) exceeds a certain amount.For this reason, the value of your itemized deductionsmay not be as great as they appear if you fall into this category.

To determine whether the sum of your itemized deduc-tions will exceed the standard deduction that you’re enti-tled to take, add up all your anticipated itemizeddeductions and subtract this number from the standarddeduction. If the net result is a positive number, itemizeyour deductions; if the net result is negative, take thestandard deduction.


Figuring out AGIYour AGI is your adjusted gross income, a number you need to know ifyou’re planning on pursuing deductions. The quickest way for you todetermine your AGI is to refer to your last tax return. You can find yourAGI for the previous year on the first page of your 1040 return on line 37.If your income and deductible expenses aren’t expected to change muchthis year as compared to last year, use last year’s AGI for your planningpurposes.

07_401170-ch02.qxp 7/24/08 1:10 AM Page 88

89#28

Boost Your Household Income

When you can’t make ends meet with expense cutsalone, start looking at the other end of the cash

flow equation: income. You, your partner, and any chil-dren you have may be able to generate enough additionalincome to soften the money woes that come with a diceyeconomy.

The following sections explain two ways to increase thehousehold income — taking on another job yourself andputting other family members to work.

Make the Most of MoonlightingAssuming your current agreement with your employerdoesn’t rule it out as an option, moonlighting (that is,holding a second regular job in addition to your mainjob) can be an excellent source for the extra cash youneed. If you don’t have a marketable skill, you can stillearn some extra money by taking on a second job at alocal restaurant or store. Do it regularly enough and youhave a steady additional flow of income.

07_401170-ch02.qxp 7/24/08 1:10 AM Page 89

Don’t plan on the extra money unless you always get theextra work or are very confident that you’ll be able tohustle up side jobs. Develop a plan that doesn’t take intoaccount the sporadic moonlighting money, but use thatmoney to help you reach your goals earlier than the plancalls for.

If you have young children, you may need to draw up awork schedule that consists of one partner working daysand the other going to work when the first comes homein the evening. Depending on your family’s goals, this canbe a temporary arrangement until the family gets back onits feet.

Put Other Family Members to Work

During World War II, when manpower was short in theUnited States, women made up a significant segment ofthe workforce. When the United States was at war, every-one pulled together and contributed to keep the countryrunning and our military overseas well equipped.

When your family is facing a financial crisis, everybody ofworking age can pull together and contribute his or herfair share to get the family back on its feet. If you haveyoung children whom you’re trying to shield from theproblem, that’s fine, but older teenagers are certainlycapable of earning their own spending money andenough to cover their cellphone bills. Simply explainwhat’s going on, ask them to assist you and be part of thesolution, and share your plan with them. The experiencecan be valuable if they ever face a similar situation.


07_401170-ch02.qxp 7/24/08 1:10 AM Page 90

If an older child is extremely reluctant or refuses to help,tough love may be the order of the day. Older kids needto pay their fair share. Obviously, I’m not talking aboutasking your 15-year-old son to get a job bagging groceriesand turn over his whole $87 paycheck each week, but youmay ask your 17-year-old daughter to help offset the addi-tional cost of auto insurance with a portion of her weeklycheck. Adult children should be working and contributingsomething toward the house payment, maintenance, andutilities; otherwise, perhaps they can find more affordableaccommodations elsewhere.

Boost Your Household Income 91

07_401170-ch02.qxp 7/24/08 1:10 AM Page 91


07_401170-ch02.qxp 7/24/08 1:10 AM Page 92

Part III

Putting YourPersonal Finances

on Firm Footing

08_401170-pp03.qxp 7/24/08 12:33 AM Page 93

In this part . . .

You’ve worked hard to get where you are,and the fear of losing ground during dicey

economic times can make you feel that not onlyis your current situation in jeopardy, but so arethe things you’ve planned for your future: yourretirement, your own or your kids’ college educa-tion, and so on.

The good news is that you don’t have to give upyour future security or dreams; you just have tobe smart about how you continue to pursue them.The bad news? There isn’t any. Being proactive isthe best way to be in control, and this part is fullof information and advice about what you can doto protect your financial goals and find savingsopportunities at the same time.

08_401170-pp03.qxp 7/24/08 12:33 AM Page 94

95#29

Avoid Unnecessary Fees

Having a check returned for insufficient funds andbeing charged the penalties will certainly get your

attention, but even smaller fees can take their toll onyour finances. To avoid getting dinged for unnecessaryfees, follow this advice:

� Keep your checking account in the black to avoidoverdraft charges. When you write a check thatbounces, you generally have to pay your bank’s over-draft fee and a fee to the business you wrote thecheck to. If the overdraft results in a late payment,you have to pony up for the late payment fee, too.Things only get worse if the late payment is to a creditcard company that ups the interest rate you pay.

� Don’t use your debit cards when doing so resultsin a fee. If you use your debit card at a bank that’snot your own, you may end up paying a service feeto access your own money. Some banks and creditunions add a charge when you use your debit cardas a debit card (the transaction requires that youenter your PIN) rather than as a credit card or if youuse it more than a certain number of times. Thesefees are easy to avoid: Go to your own bank.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 95

� Avoid cash advances with your credit card. Manycredit card companies charge a higher percentage ofinterest for cash advances than they do for othertransactions. And because the card company gets todecide which balance it applies your payment to, itpays for the lower-interest transactions first, leavingthe higher interest charges on the card longer.

Part III: Putting Your Personal Finances on Firm Footing 96

09_401170-ch03.qxp 7/24/08 12:33 AM Page 96

97#30

Shop Around for Insurance

When you’re buying any kind of insurance, do yourinitial research and comparison shopping online

to become better informed about competitive rates forvarious policies. Then contact at least three sources andallow each company to provide you with quotes on a fewdifferent policies that may be best for your situation. Asyou question each company, be sure to consider the following:

� How much insurance you need

� How much you can afford to pay in premiums

� Special features or benefits, such as a waiver of pre-mium, increasing death benefits, long-term care ben-efits, and so on

The three primary ways to obtain insurance quotes andproducts are through the following:

� A captive agent represents only one company, suchas Allstate, State Farm, or American Family. It mayseem that a captive agent isn’t the best way to go;however, captive agents can be extremely competi-tive and provide exceptional customer service,especially for home and auto coverage. Yet thesetypes of companies often aren’t the most competi-tive in the areas of life, health, disability, and long-term care insurance.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 97

� An independent agent represents multiple insurers.Independent agents can do a lot of comparisonshopping for you and may be able to provide youwith one-stop shopping for all your insurance needs.You still need to shop around, though. The differ-ence in offerings can be huge even among independ-ent agents.

� Buying directly from the insurance company isanother option. Buying insurance directly from thecompany, without an agent, can usually result in sav-ings of 10 to 15 percent. Don’t count on any person-alized attention, but you may save some money.However, think long and hard before you buy certaintypes of insurance, such as long-term care, disabil-ity, or medical insurance, without the guidance of aninsurance professional, because these policies areoften complex and require the guidance an insur-ance professional can provide.


09_401170-ch03.qxp 7/24/08 12:33 AM Page 98

99#31

Raise Your Deductible to Save on Insurance

G iven all the insurance coverage you need — health,homeowner’s, life, auto — insurance costs can take

a large bite out of your bank account. Fortunately, youcan reduce the amount you pay for insurance withoutjeopardizing protection. This tip applies to all insuranceplans.

To some people, a lower deductible (the amount you haveto pay before insurance starts paying the bills) meansyou “get something” from an insurance plan. Others pointout that plans with higher deductibles are cheaper. Ingeneral, high-deductible plans are much less expensivethan low-deductible plans. If you can raise and set asidethe money you’d need to make your deductible, you cansave on your insurance premiums.

Insurance is intended to cover risks you can’t afford tobear on your own. The higher the deductible, the lowerthe premium. By raising your deductibles to $1,000 from$250, you may be able to reduce your premium by asmuch as 25 to 30 percent. Just make sure you don’t raiseyour deductible so high that you can’t pay that amount incase of an emergency.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 99

100 #32

Save Money on Life Insurance

Buying your life insurance in pieces is a lot moreexpensive than covering all your needs in one

policy. Plus, buying in pieces leaves you vulnerable to agap in your coverage. Examples of piecemeal buying arehaving mortgage insurance through your lending institu-tion, credit card insurance through your credit card com-pany, credit life insurance with your car loan, supplementalgroup life insurance at work, flight insurance at the air-port, and so on. When buying life insurance, figure outhow much insurance you need to do the whole job andbuy one policy.

In addition, don’t buy policies you don’t need or thatdon’t offer adequate protection. Case in point: accidentaldeath or travel accident insurance. With both accidentaldeath and travel accident policies, you have no coveragefor death from natural causes. Buying these policies is anespecially bad move if you buy them in lieu of the full lifeinsurance you really need. When buying life insurance,buy only coverage that pays for any death — natural oraccidental.

Finally, buy life insurance when you need it, not before.Many single people have expensive cash value life insur-ance years before anyone in their life would suffer

09_401170-ch03.qxp 7/24/08 12:33 AM Page 100

financially from their death. You wouldn’t buy car insur-ance if you didn’t own a car, so don’t buy life insuranceunless someone depends on you financially.

Some people fall into this trap, thinking they’re savingmoney because life insurance is cheaper when you’reyoung. This myth started because the annual cost of lifeinsurance is cheaper per year when you’re young becauseyour chances of dying are lower. But the total cost thatyou pay over the life of the policy isn’t cheaper. Supposeyou buy life insurance for $100 a year at age 25 and yourfriend waits until age 35 and has to pay $110 a year forthe same coverage. Now you’re both 35 and you pay $10less per year — but how about the $1,000 that you paidfor the ten years that you didn’t need it? Plus interest?Don’t buy life insurance until you need it.

Save Money on Life Insurance 101

09_401170-ch03.qxp 7/24/08 12:33 AM Page 101

102 #33

Qualify for Homeowner Policy Discounts

If you want to qualify for a discount on your home-owner’s policy, here’s a list of things you can do to

reduce risk, to reduce the chances of having a claim atall, and to reduce the severity of any claim you do have.You can also save on your insurance premiums by put-ting some of these tips into effect.

� Install a UL-approved smoke detector on each floor.Replace the batteries yearly. Also install a carbonmonoxide detector.

� Install a UL-approved dry-chemical fire extinguisherin the kitchen for grease fires. Check it periodicallyto make sure it’s fully charged.

� Have your fireplace, flues, and chimney cleaned reg-ularly to prevent chimney fires (and all the horribleinterior smoke damage that results).

� Install a central burglar-and-fire alarm (the premiumsavings are huge for this one — 10 to 20 percent).

� Install deadbolt locks on all access doors.

� Install a motion detector alarm.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 102

� Install a sump pump system to prevent damage fromgroundwater, which is excluded by virtually everyhomeowner’s policy. (Be sure to buy optional sumppump failure coverage.)

� If you have a swimming pool, have an approvedfence. Take out the diving board (where mostinjuries occur). Add a locking pool cover to preventunauthorized use.

� To avoid all the potential liability for injuries to theneighbor kids, buy your kids a membership to ahealth club offering a supervised trampoline insteadof buying a trampoline yourself.

If you’ve already taken some of the steps that translate toa discount, make sure they’re reflected on your policy.And ask your insurance agent whether any other dis-counts are available to which you may be entitled.

.

Qualify for Homeowner Policy Discounts 103

09_401170-ch03.qxp 7/24/08 12:33 AM Page 103

104 #34

Take Advantage of CoverageYou Already Have

A great way to save on your homeowner’s policy is totake advantage of the coverage you already have andavoid unnecessary coverage:

� Trailers: If you own an expensive camping-trailer,you can insure it best and most economically byadding the trailer to your car insurance policy.Because car insurance covers only the trailer, addSpecial Perils contents coverage to your home-owner’s policy to get better coverage for the belong-ings in your trailer in case of damage from acollision or overturn.

� Instrument rentals: Parents commonly rent instru-ments instead of buying them, especially for thechild’s first instrument. The rental agency requiresyou to insure the rental and offers you insurance onthe $800 guitar you’re renting — typically $4 to $8 amonth added to your rental fee. That’s $48 to $96 ayear. You can schedule the $800 guitar under yourhomeowner’s policy for $4 to $8 a year! That’s theway to go — always. Be sure to include the rentalagency as Loss Payee on the schedule so its interestis properly covered.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 104

� Valuables: If you have any kind of property that’squite valuable and could be stolen, like jewelry orfine paintings, install a central burglar-and-firealarm. Installation costs are often $200 or less. Themonthly cost to monitor the alarm is about $20. Youreduce the risk of losing an irreplaceable treasure,and you receive 10 to 20 percent off your home-owner’s rates.

Take Advantage of Coverage You Already Have 105

09_401170-ch03.qxp 7/24/08 12:33 AM Page 105

106 #35

Look for Discounts andPremium Credits from Your

Car Insurance

The following are key factors that car insurers use todetermine the price of your auto insurance and tips

on what you can do to keep it as low as possible:

� Age: If you’re very young or quite elderly, your riskof being in an auto accident is statistically muchhigher than for middle-aged folks. You can’t do any-thing about your age. However, some insurers maypenalize you less than others with regard to yourcost of insurance.

� Auto insurance claims history: Safe drivers arerewarded with lower auto insurance premiums. Yourhistory of making claims against your auto policydirectly affects the cost of your insurance. The moreyou use insurance, the more your insurance costs.

� Commuting distance to work: The farther youdrive, the higher your risk of being in an accident.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 106

� Credit history: Insurance companies have deter-mined that there’s a direct correlation between yourcredit history and your risk as a driver.

� Driving record: If you receive a traffic ticket forspeeding or another form of reckless driving, youpay for that carelessness in higher insurance premiums.

� Marital status: Married people historically are morestable drivers.

� Place of residence: Your zip code can have a drasticeffect on your cost of insurance. Certain zip codeshave a history of more auto theft, vandalism, and soon, and the insurance companies are still allowed topenalize you for living in these zip codes.

� Type of car you drive: A Dodge Dart station wagonversus a Hummer or a Corvette? The latter tworequire substantially higher auto insurance premi-ums because those cars cause or potentially receivemuch more damage in the same accident as the sta-tion wagon, and they cost a lot more to repair orreplace than the older, less expensive vehicle. Also,drivers of sports cars statistically drive more care-lessly than drivers of sedans.

� Grades your child gets: Most insurance companiesgive a 10- to 25-percent discount for a B average orbetter and another 30- to 40-percent discount if thestudent is attending college more than 100 milesfrom home and has no car at school. Ask for theGood Student and Distant Student discounts.

� Other conditions: Other things can reduce yourinsurance costs:

• Having your home, auto, and liability insur-ance policies with the same company

Look for Discounts and Premium Credits from Your Car Insurance 107

09_401170-ch03.qxp 7/24/08 12:33 AM Page 107

• Having safety devices, such as airbags,antilock brakes, or an alarm system

• Not letting other people drive your vehicle(multiple drivers create multiple risks)

• Taking a driver safety course; many compa-nies provide a discount to drivers who havetaken a safe driving course

• Practicing defensive-driving techniques andwearing your safety belt

• Paying your auto insurance premium annually;most companies charge a service fee if youpay your premiums monthly, quarterly, andsometimes semiannually


09_401170-ch03.qxp 7/24/08 12:33 AM Page 108

109#36

Save on Medical CoverageOffered by Your Car Insurance

Car insurance companies generally offer coverage foryour medical bills. This medical coverage depends

on your state’s laws and generally comes in two flavors:Medical Payments (Med Pay) coverage and PersonalInjury Protection (PIP) coverage.

The two forms of coverage are similar; they both payyour medical bills resulting from a car accident, regard-less of fault, up to the limit you purchased. PIP has theadded advantage (at a considerably greater cost) of alsoreimbursing you for some of your lost wages or replace-ment services (if you have to hire help around the home).Keep in mind three things when buying either coverage:

� State laws on Med Pay or PIP coverage vary dramati-cally. Check the law in your particular state.

� Buy only as much medical-related coverage as thelaw requires. You can save money on your insuranceby buying no more than minimum coverage for eitherMed Pay or PIP. Medical and disability costs shouldbe covered under other policies you have, so havingadditional car insurance coverage is unnecessary.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 109

� Avoid buying additional insurance that covers yourmedical bills only when they’re the result of car acci-dents. First, these expenses should be covered byother policies. Second, if you use this type of policyin lieu of a medical or disability policy, you’re leav-ing yourself unprepared for medical expenses thatare the result of other kinds of problems.


09_401170-ch03.qxp 7/24/08 12:33 AM Page 110

111#37

Continue Health CoverageWhen You Leave Your Job

If you leave your job for any reason, you can lose yourgroup health insurance. But almost all employers are

required by law to allow terminated employees to con-tinue group insurance coverage through COBRA (theConsolidated Omnibus Budget Reconciliation Act). Eventhough you must pay 100 percent of the cost of the insur-ance, this is your best option. If COBRA isn’t an option foryou, or if you’re close to exhausting it (generally after 18months), don’t go without health insurance. Considerthese options:

� Individual health insurance: If you’re relativelyhealthy, consider an individual health insurancepolicy. To find a health insurance broker in yourarea, visit the National Association of HealthUnderwriters (www.nahu.org/consumer/findagent.cfm).

� HIPAA: The Health Insurance Portability andAccountability Act requires states to provide mini-mal coverage after you exhaust COBRA benefits, aslong as you haven’t had an extended break in cover-age, which varies by state. Be aware that premiums

09_401170-ch03.qxp 7/24/08 12:33 AM Page 111

under HIPAA may be two to three times the standardrate policy. Each state has its own HIPAA rules; tofind out the rules in your state, contact your stateinsurance department.

� Your state’s high-risk health insurance pool: Ifyou’re medically uninsurable due to significanthealth problems, apply for coverage through yourstate’s high-risk pool (if it has one). To find outwhether your state has such a pool and how itworks, contact the National Association of StateComprehensive Health Insurance Plans(www.naschip.org).

� Medicaid: Medicaid is a federal program that pro-vides healthcare services to the poor. Medicaid’s eligibility requirements and benefits vary by state.Go to www.nahu.org/consumer/healthcare/topic.cfm?catID=18 for more info.

� Local assistance programs: If you’re in a financialcrisis, look into assistance programs that providemedical care at no or nominal cost. A small monthlyfee pays for medical care at designated facilities forall family members.

� State Children’s Health Insurance Program: SCHIPprovides healthcare coverage to children whosefamilies make too much money to qualify forMedicaid. Find out more at www.nahu.org/consumer/healthcare/topic.cfm?catID=19.

� Federally funded community health centers: Thesecenters provide healthcare assistance to the needy.Go to ask.hrsa.gov/pc or call 800-275-4772) formore info.


09_401170-ch03.qxp 7/24/08 12:33 AM Page 112

113#38

Cap Your Out-of-Pocket Health Expenses

Most health insurance plans contain some kind ofco-payment on your part. Perhaps you have a co-

pay per visit, such as $15 for each office visit or $40 if yougo to the emergency room. Perhaps you have adeductible of $500 a year before your coverage kicks in(meaning that you pay the first $500 of your medicalexpenses each year). Or perhaps your policy pays 80 per-cent of all covered medical bills, with you responsible forthe other 20 percent.

Paying the per-visit co-pays or the deductible usuallyisn’t a hardship. But paying 20 percent of all your majormedical bills in one year, without any limit on the possi-ble amount of your contribution, easily can be.

When buying health insurance that contains a percentageco-payment, make sure the policy includes an annualmaximum that’s reasonable for your out-of-pocketexpenses. For example, a 20-percent co-pay on the first$5,000 in expenses you have for the year is a $1,000 cap— with the insurer paying 100 percent of the bills the restof the year.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 113

If you have group coverage from your employer that hasno cap on the 20-percent co-payment, you have a coupleof options. If you work for a large employer, you oftenhave more than one plan to choose from. See whetheranother plan has a cap. Otherwise, buy a personal ExcessMajor Medical policy with a large deductible. This policytypically pays 80 percent of your 20-percent co-paymentresponsibility.


09_401170-ch03.qxp 7/24/08 12:33 AM Page 114

115#39

Save on Individual HealthCoverage

The best way to save money on your health insurancepremium is not to smoke or use tobacco. Unlike

group policies, almost all individual policies differentiatesmokers from nonsmokers because the claims costs forsmokers are much higher. Blue Cross of Minnesota, forexample, cuts 30 to 40 percent off its standard rates ifyou haven’t used tobacco for three years.

You can also save on individual coverage by cutting outunneeded coverage, cutting back doctor choice, or rais-ing deductibles.

When deciding between two deductibles on a healthpolicy, choose the lower deductible if you’re in doubt. Youcan raise your deductible later, anytime you want to. Butto lower it, the whole family must qualify medically — notlikely if you’ve just incurred some big medical bills.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 115

116 #40

Use Medical SavingsAccounts

In 1997, Congress created a pilot program calledMedical Savings Accounts (MSAs) and made the

accounts available to self-employed individuals and theirfamilies. An MSA operates like an individual retirementaccount (IRA) coordinated with a high-deductible majormedical health insurance plan. Here are its features:

� Like an IRA, contributions are income taxdeductible.

� Earnings on the account are tax sheltered.

� The maximum contribution per year is 65 percent ofyour major medical plan deductible for individualsand 75 percent for families. The insurance plan mustmeet MSA standards.

� From the account, you can pay your deductibles andmost other medical expenses not covered by yourhealth plan. Because the MSA money has never been taxed, you’re paying those bills with pretaxdollars — a huge advantage.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 116

� If you’ve stayed reasonably healthy, you can leaveunused funds on deposit and either use them infuture years or save them as supplemental retire-ment dollars. If you don’t use them for medical bills,withdrawals are taxed much like traditional IRAswhen you do retire.

If you have interest in an MSA, check first with your agentor state insurance department. MSAs aren’t approved inall states. You can set up an MSA wherever you can estab-lish an IRA — banks, savings and loans, investmenthouses, insurance companies, and so on.

Use Medical Savings Accounts 117

09_401170-ch03.qxp 7/24/08 12:33 AM Page 117

118 #41

Tap into Temporary Health Insurance

Many states allow health insurance companies tooffer the public short-term or temporary health cov-

erage to meet short-term needs, such as covering aperson who’s between jobs or a college student who isn’tcovered by student health insurance during the summer.Coverage is usually available in increments of 30, 60, 90,120, and sometimes 180 days. Coverage is usually quitegood in many respects. Typically, temporary policieshave a coverage limit of $1 million or more. They usuallyinclude freedom-of-choice and a maximum amount onout-of-pocket expenses.

The biggest advantage to a temporary policy is that youcan qualify with almost no medical questions. Coveragecan be immediate, if needed. But temporary coverage hasat least five disadvantages:

� Preexisting conditions aren’t covered. If you’ve everbeen treated for a condition in the past, you won’tbe covered if the condition flares up again.

� The insurance usually isn’t renewable.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 118

� When the coverage period you’ve chosen ends, sodoes the coverage — often, even if you’re lying seri-ously ill in the hospital.

� Claim payments are often delayed.

� Coverage outside the country is often excluded.

Because of major limitations, you generally want to avoidbuying temporary insurance unless you have no otheroption. If you’re between jobs, continue your group cov-erage from your prior employer under COBRA if you can.And for summer coverage, keep college students continu-ously insured under your family plan.

Tap into Temporary Health Insurance 119

09_401170-ch03.qxp 7/24/08 12:33 AM Page 119

120 #42

Know the Tax Benefits of a 401(k) Plan

When you sign up for a 401(k) plan, you agree to letyour employer deposit some of your paycheck

into the plan as a pre-tax contribution instead of paying itto you. Your employer may even throw in some extramoney known as a matching contribution. You don’t payfederal income tax on any of this money until you with-draw it.

How much your 401(k) will be worth when you retiredepends on a number of factors, such as which invest-ments you choose, the return you get on those invest-ments, whether your employer makes a contribution, andwhether you withdraw money early.

A 401(k) lets you pay less income tax in the following twoways:

� It lowers your taxable income. The money you con-tribute to a 401(k) reduces your gross income, or tax-able income (your pay before tax and any otherdeductions). When you have lower taxable income,you pay less federal income tax, and in most states,less in state and local income or wage taxes.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 120

� It enables you to defer taxes. The gains in your401(k) aren’t taxed annually, as they would be in aregular taxable bank savings account, a personalmutual fund account, or a brokerage account (whichyou may use to buy and sell stocks and other invest-ments). With a 401(k), you defer paying taxes onyour investment earnings until you withdraw themoney.

Know the Tax Benefits of a 401(k) Plan 121

09_401170-ch03.qxp 7/24/08 12:33 AM Page 121

122 #43

Continue to Invest, Even at aReduced Amount

If money is tight, you may be tempted to stop con-tributing to your 401(k) (or any retirement) plan to

bump up your bring-home pay. But you lose not only taxsavings but also the benefits of the compounding.

The following example shows how you can cheat yourselfby waiting just a few years to start saving or by stoppingyour contributions. Ken, Rasheed, and Lisa all earn$25,000 a year. They all decide to contribute 5 percent oftheir salary, or $1,250, to their 401(k) plans, but over dif-ferent periods of time. Assuming that each has an aver-age annual return (how much the money increases invalue when it’s invested) of 8 percent, look at the surpris-ing results shown in the following chart.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 122

You can see that it pays to start saving early and to keepsaving. In this example, each person is saving a littlemore than $100 per month. If that seems like too muchfor you now, consider contributing a smaller amount.Sometimes that’s the best way to get started or to keepgoing.

If you absolutely must scale back your 401(k) contribu-tions due to financial hardship, factor in whether youremployer matches your contribution. If it does, loweryour contribution only as far as your employer matches;otherwise, you’re doing yourself a double disservice.

Advantages of Starting to Save Early Through a 401(k) Plan

A – started late22 years @ $1,250

What you invest andwhat you earn

Total savedAmount invested

Investment return

C) LISA starts savingearly and keeps at it!

B) RASHEED starts savingearly, quits after 8 years

A) KEN waits 8 yearsto start saving

AnnualInvestment

Year endvalue @ 8%

AnnualInvestment

Year endvalue @ 8%

AnnualInvestment

Year endvalue @ 8%Year

The figures indicated reflect employee contributions only. In this example, investment return is calculated at 8%. Your own 401(k) investmentreturn may be higher or lower, depending on the performance of the funds offered and how you invested the money in your account.

11,250 2,694 1,250 2,694

$1,250 $1,295 $1,250 $1,2952

1,250 4,205 1,250 4,20531,250 5,836 1,250 5,83641,250 7,598 1,250 7,59851,250 9,501 1,250 9,50161,250 11,557 1,250 11,55771,250 13,777 1,250 13,7778

0 14,879 1,250 16,17490 16,069 1,250 18,763100 23,611 1,250 35,167150 34,692 1,250 59,271200 50,973 1,250 94,68725

30

0 0$0 $0

0 00 00 00 00 00 0

1,250 1,2951,250 2,6941,250 11,5571,250 24,5791,250 43,7131,250 71,827

$71,82727,50044,327

B – started early8 years @ $1,250Total saved

Amount investedInvestment return

$71,82727,50044,327

C – started early & continued30 years @ $1,250

Total savedAmount invested

Investment return

$71,82727,50044,327

0 74,897 1,250 146,724

Continue to Invest, Even at a Reduced Amount 123

09_401170-ch03.qxp 7/24/08 12:33 AM Page 123

124 #44

Borrow from Your 401(k)

You can borrow from your 401(k) only if your plandocument allows you to borrow for the specific

reason you have in mind. Some plans permit borrowingfor any reason, but most permit loans only for the rea-sons included on the hardship withdrawal list. Get detailsabout account loans from your summary plan descrip-tion, your benefits office, or 401(k) plan provider.

Figure Out How Much You Can Borrow

The government sets the limits on how much you canborrow. Generally, you’re allowed to borrow no morethan 50 percent of your account value up to $50,000 maxi-mum. The other half stays in the account as collateral.However, government rules theoretically permit borrow-ing 100 percent of an account up to $10,000. So if youraccount value is $15,000, you may be able to borrow$10,000, even though 50 percent of $15,000 is only $7,500.Most plans don’t allow this; they limit all loans to 50 per-cent of the account value for the sake of simplicity. Someplans also impose a minimum loan amount becauseadministering a loan for only a few bucks isn’t worth thehassle.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 124

Determine How Much Interest You’ll Pay

The interest you pay on your 401(k) loan is determinedby your employer and must be a level that meets IRSrequirements. It’s usually the prime rate (the interest ratebanks charge the most creditworthy companies) plus 1or 2 percentage points. In most plans, the interest youpay goes back into your account, so you’re in the inter-esting position of being both the borrower and thelender.

Repayment RulesYou normally have to repay the loan within five years, butyou can repay it faster if your plan permits. Youremployer may permit a longer repayment period if youuse the money for a home purchase.

Employers usually require you to repay a loan throughdeductions from your paycheck. The loan repayments aretaken out of your paycheck after taxes, not pre-tax likeyour original contributions. Then, when you eventuallywithdraw this money in retirement, you pay tax on itagain. This point bears repeating: You pay tax twice onmoney used to repay a 401(k) loan.

Most employers require you to pay back the loan withpayroll deductions, so if you’re laid off or you quit yourjob, continuing to repay the loan becomes impossible.You can either repay the entire outstanding loan balanceright away or take the amount as a taxable distribution(payment from the account).

Borrow from Your 401(k) 125

09_401170-ch03.qxp 7/24/08 12:33 AM Page 125

If you don’t have the money to repay the loan, you haveto declare the entire unpaid loan balance as income onyour tax return. Adding insult to injury, if you’re youngerthan 55 when you leave your job, you’ll probably have topay an early withdrawal penalty of 10 percent or more.

If you take a loan, continue to make pre-tax contributionsto your 401(k) while repaying the loan. If you don’t, youreventual account balance will be lower than if you hadn’ttaken the loan. Say you’re contributing $1,800 a year pre-tax to your 401(k) and you receive an employer matchingcontribution of $900. If you stop contributing for fiveyears (the loan repayment period), you lose out on $9,000of your own contributions ($1,800 × 5) and $4,500 inemployer matching contributions ($900 × 5). If you investthose amounts in the 401(k) plan over 30 years, with anaverage return of 9 percent, they grow to $139,340.


09_401170-ch03.qxp 7/24/08 12:33 AM Page 126

127#45

Let Your 401(k) Roll Over toAvoid Taxes

When you leave your job, one of the many formsthat you’ll likely have to fill out is a 401(k) distribu-

tion election form. (Distribution is employee-benefit-speakfor the payment of your vested 401(k) money to you.)

The most sensible thing to do with your 401(k) from atax-management point of view is a direct rollover (alsoknown as a trustee-to-trustee transfer) of the money. Withthis type of rollover, the money goes directly from your401(k) plan into another tax-deferred account — an indi-vidual retirement account (IRA) or your new employer’splan. By doing a direct rollover, you don’t have to pay any tax on the money when it comes out of your oldemployer’s 401(k). The money also continues to growtax-deferred in the new account.

Roll Over into an IRAYou can roll money from your 401(k) into a traditionalIRA. When rolling over into an IRA, you can do a partialrollover, rolling over only part of your 401(k) while leav-ing the rest in your 401(k) account or cashing it out. Forexample, you may not want to roll over employer stock if

09_401170-ch03.qxp 7/24/08 12:33 AM Page 127

you receive shares as part of your distribution. Or youmay withdraw some of your 401(k) money right away topay for an expense but roll the remainder into an IRA tokeep it working for your retirement.

If you already have a traditional IRA, you can roll your401(k) money into that account. However, it’s probably abetter idea to open a separate IRA just for your rollovermoney. This makes keeping track of the funds easier. Thistype of account is often referred to as a conduit IRAbecause it can act as a conduit between your old 401(k)and a new employer’s plan or a rollover IRA.

You can’t roll your 401(k) directly into a Roth IRA. (This isbecause a Roth IRA is treated differently for tax pur-poses.) What you may be able to do, however, if youreally want a Roth, is convert your traditional IRA into aRoth after doing the rollover. You can do a partial conver-sion of a traditional IRA into a Roth — leaving some of thetraditional IRA intact. Because you pay income tax on theconverted amount, reducing the amount you convertlowers the tax you pay for the conversion.

Roll Over into Another Employer’s Plan

You may be able to roll the money over into your newemployer’s plan. You may decide to do this for a numberof reasons, including


09_401170-ch03.qxp 7/24/08 12:33 AM Page 128

� Your new employer has a terrific plan with greatfunds and low expenses.

� You want to consolidate all your retirement savingsin one place for ease of management.

� You think you may want to take a loan someday(you can’t take a loan from an IRA).

Your new plan may require you to wait until you’re eligi-ble to participate before accepting a rollover from yourold 401(k). If, for example, your new employer has a wait-ing period of one year before you can contribute to the401(k), you have to wait one year to roll the money intothe 401(k). In that case, you can either leave your moneyin your former employer’s plan or move it to a conduitIRA, ready to be transferred into the new 401(k) when thetime comes.

Let Your 401(k) Roll Over to Avoid Taxes 129

09_401170-ch03.qxp 7/24/08 12:33 AM Page 129

130 #46

Investigate Tax-DeferredWays to Save for College

Saving money is a good thing, even when financialtimes are tough. Uncle Sam is prepared to back up

that philosophy with a variety of savings programs thatcontain built-in tax incentives.

Section 529 PlansQualified tuition programs covered under Section 529 ofthe Internal Revenue Code allow you to save money orpurchase tuition credits for future college expenses for aspecific beneficiary. Your money goes into an accountthat’s administered either by the state (yours or anyother — some states allow residents of other states toparticipate in their plans) or by a specific college or uni-versity. You may see them called either Section 529 plansor qualified tuition programs — they’re one and the same.These savings plans can be a fantastic way to save forfuture educational expenses. To make a plan work,though, you have to understand its requirements andfollow them.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 130

When you make a contribution to a Section 529 plan,you’re not allowed any federal income tax deduction forthe amount of your contribution (unlike many sorts ofretirement plans, which defer income tax not only on theaccrued earnings in the account but also on your contri-butions). Depending on which state you live in (and if youuse its plan), you may get a current state income taxdeduction for part or all of your contribution each year.

After your money is safely tied up in a Section 529 plan,interest that you earn on it isn’t taxed until distributionsare made to your designated beneficiary. And if you usethese distributions to pay the qualified educationexpenses of a student at an eligible educational institu-tion, accrued earnings generally aren’t taxed at all. Inother words, a Section 529 plan allows you to save forcollege, and it exempts or defers income tax on theaccrued earnings until the designated beneficiary beginstaking distributions from the plan.

To get these tax benefits, the expenses must be used forqualified expenses (tuition, room and board, books, andso on) at qualified institutions, such as postsecondaryschools eligible to participate in U.S. Department ofEducation financial aid programs, many vocational andtechnical schools, community colleges, and so on.

Coverdell AccountsCoverdell education savings accounts (ESAs) also enableyou to save now for future educational expenses —whether primary, secondary, or postsecondary — of adesignated beneficiary. You can invest money inCoverdell accounts in a variety of ways: stocks, bonds,money market accounts, certificates of deposit, and so

Investigate Tax-Deferred Ways to Save for College 131

09_401170-ch03.qxp 7/24/08 12:33 AM Page 131

on, although you may not invest in life insurance policies.Under the Coverdell rules (and unlike Section 529 rules),if you designate yourself the one responsible for all deci-sions on this particular account, you keep control of themoney and make all the investment decisions for yourchild’s account. Over the years, the investments willhopefully earn significant income through interest, divi-dends, and capital gains, until the time the account isclosed.

You pay no income tax on the income when it’s earned,and as distributions are made from these accounts toyour designated beneficiary for qualified educationalexpenses, the income portion of the distribution isn’ttaxed, either to you or to your student.


09_401170-ch03.qxp 7/24/08 12:33 AM Page 132

133#47

Squeeze Out Every Drop ofAvailable College Money

After you begin to suspect that your savings andamounts available from current earnings will fall

short of your child’s anticipated educational costs, someplanning may well increase the amount of outright grantsand very low-cost loans your student may qualify for.

Time the Receipt of Taxable andTax-Exempt Income

Do your best to schedule large infusions of income andcash two years or more before your child is due to startcollege; the financial aid folks won’t care about what’s onyour income tax return in any years other than your baseyears (the calendar years used to determine how muchfinancial aid you receive). So if you need to sell an invest-ment, do it sooner rather than later. If you’re going toreceive a year-end bonus, try to defer it to a non-baseyear if possible. You want to avoid large amounts of extraincome in your base years.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 133

Pay Down DebtThe folks who process your FAFSA (Free Application forFederal Student Aid; see www.fafsa.ed.gov) are con-cerned with how much you have in income and assets,not how much you owe, which means you don’t even getany credit for your debts. So to minimize the value ofassets you show on your aid application, get rid of yourdebt. Sell some assets, if necessary, to pay off your carloan, make extra mortgage payments, and bring yourcredit card balances to zero. Complete all these transac-tions before you fill in your aid applications; the FAFSAfolks are concerned only with the value of your assets onthe day that you complete the application — not the daybefore and not the day after. Your good intentions will beworth less than nothing if you raise the cash but fail topay off your debt before filing your application.

Get Assets Out of Your Child’s Name

The financial aid people include at most 5.6 percent ofparents’ includable assets in their calculation of expectedfamily contribution (EFC), the amount that the U.S.Department of Education figures you should be able tocough up for one child’s educational costs in any givenyear. They expect your child to kick in a whopping 35 per-cent of her assets as part of the same EFC for one year.

If you want to minimize the amount of your EFC, keepassets in your name alone, joint with your spouse, or inthe name of another relative outside the household. Ifyour child has accumulated assets since birth — for


09_401170-ch03.qxp 7/24/08 12:33 AM Page 134

example, in a Coverdell ESA (see Tip #46, “InvestigateTax-Deferred Ways to Save for College,” for more onCoverdell accounts) — spend down these assets first.

Anticipate Your ExpensesMost people have large expenses they tend to postpone,such as replacing a car or a roof, when facing the first college tuition bill. But while a certain amount of self-deprivation is normal for parents, indulging yourself alittle may actually help your student’s overall financialaid picture. Replace that old rust bucket that’s been heldtogether with duct tape for the last three years (butremember, pay cash — don’t finance it unless youabsolutely must), and repair the roof. Paying for theseitems depletes your cash and asset balances, which youmust, of course, report accurately on the FAFSA. Becausethe value of the new car and the house repairs isn’tincluded on your aid application, you can successfullyconvert reportable assets into nonreportable assets andalso take care of some necessary expenses in theprocess.

Spread Your Available Assetsacross Multiple Students

You may be surprised to find out that although each ofyour children has to file his or her own FAFSA applica-tion, your EFC isn’t the same for each student. The por-tion of the EFC that’s calculated based on your income isdivided by the number of students you currently have incollege. The student’s portion (based on his income andassets) is then added on each application, arriving at the

Squeeze Out Every Drop of Available College Money 135

09_401170-ch03.qxp 7/24/08 12:33 AM Page 135

EFC for each student. The more members of your familywho are attending a postsecondary school at any giventime, the greater the potential financial aid award foreach student. Although the total that you’ll be expectedto pay will likely be greater for multiple students than itwould be if you just had one in school, the per-studentcost should be less (unless your income and/or assetvalue is very large).


09_401170-ch03.qxp 7/24/08 12:33 AM Page 136

137#48

Look into Federal AssistancePrograms

The U.S. Department of Education will give out approx-imately 83 billion dollars this year to help students

and their families afford the steep costs of university, col-lege, and trade school. This whopping amount representsroughly 60 percent of all student aid disbursed, so it’s anobvious place to start looking for free money. To accessthese monies, you need to fill out the FAFSA (FreeApplication for Federal Student Aid).

Federal Pell GrantsPell grants are designed for undergraduate students whohaven’t yet earned a bachelor’s or professional degree —and this includes high school students heading into theirfirst year of college. These grants, which are given to stu-dents based on need, are especially great because theydon’t have to be repaid. Note: Need is defined as the dif-ference between what a student (and her parents orguardians) can pay and the actual cost of her education.

No matter how desperate your financial position, themost you can expect from the Federal Pell Grant programis $4,050 per year.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 137

Federal SupplementalEducational Opportunity Grant

The FSEOG is a program designed for undergraduate stu-dents with “exceptional financial need.” In plain English,these students have to have a very low expected familycontribution (EFC), due to obvious poverty or immensefinancial drain on their parents (such as supporting lotsof other kids in college or caring for elderly parents). Thefirst students to get any money from the FSEOG programare Pell Grant recipients with the lowest EFCs. Like thePell Grant, FSEOG monies don’t have to be paid back.

If you qualify, you can get between $100 and $4,000 a year,depending on when you apply, your financial need, andthe funding offered at the school you’re attending. Onlyundergraduate students who haven’t earned a bachelor’sor a professional degree are eligible for FSEOG awards.

Hope Scholarship and LifetimeLearning Credits

Two of the best tax incentives aimed at middle class par-ents of college students are the Hope Scholarship Creditand the Lifetime Learning Credit. Both of these programsoffer tax credits to partially compensate parents (orother tuition payers) for paying their dependent stu-dents’ college tuition. Independent students can alsoqualify for these credits. With these credits, you candeduct a certain amount of your education costs fromyour annual income to get a break on your taxes. Formore information on the Hope Scholarship Credit and theLifetime Learning Credit, go to www.irs.gov/faqs/faq7-4.html.


09_401170-ch03.qxp 7/24/08 12:33 AM Page 138

139#49

Make Use of Federal Loans

Four major types of federal loans are available to stu-dents or their parents: Stafford Loans, PLUS Loans,

Perkins Loans, and Consolidation Loans. Each type ofloan is aimed at a different set of people, each has its owninterest rate and repayment terms, and each has its ownadvantages and disadvantages.

Some loans are subsidized, which means you don’t payinterest on them until you graduate or otherwise leaveschool. In other cases, the loans are unsubsidized, mean-ing you’re charged interest from the day the loan is sentto you to the day you pay it back. Unsubsidized loans areless advantageous than their subsidized counterpartsbecause subsidized loans give you a free ride, without theneed to service the debt (in other words, pay interest)while you’re in school.

All federal student aid (as well as state and college aid)begins with the completion of the FAFSA.

Stafford LoansStafford Loans come from two different sources: eitherthe federal government or third-party lending institu-tions. Each school chooses to use its money from theStafford program in one of these two ways:

09_401170-ch03.qxp 7/24/08 12:33 AM Page 139

� The school uses the Direct Loan Program, in whichthe U.S. government directly loans you the moneyyou need for school. Under this program, the federalgovernment is your lender and you repay the loan toUncle Sam.

� The school disburses Stafford Loans in which theU.S. government indirectly loans you the moneythrough its Federal Family Education Loan (FFEL)Program. Under this program, third-party lenderssuch as banks, credit unions, and other institutionsare your lenders and you repay them.

Stafford Loans are either subsidized or unsubsidized.With a subsidized Stafford Loan, you won’t be chargedany interest until after you graduate, drop out, or leaveschool for other reasons. These loans are awarded to stu-dents with low expected family contribution (EFC)amounts, based on the information they supply in theirFAFSAs. Unsubsidized Stafford Loans charge interest fromthe time they’re disbursed until you completely pay themoff. By law, the interest rate on your Stafford Loan can’texceed 8.25 percent, and the actual rate is fixed once ayear in late June.

PLUS LoansPLUS is an acronym for Parent Loans for UndergraduateStudents. You can probably guess that these loans areaimed at parents of kids who are undergraduate studentsat colleges. To qualify for PLUS Loans, parents must havechildren who are enrolled at least half-time at anapproved educational institution. By law, interest ratesfor PLUS Loans are set once a year but can never exceed9 percent.


09_401170-ch03.qxp 7/24/08 12:33 AM Page 140

Similar to Stafford Loans, PLUS Loans have a maximumallowable amount that can be borrowed: that maximum isthe difference between the cost of the student’s atten-dance and any other financial aid the student receives (anumber set by the school’s financial aid office). If the costfor the student to attend college is $7,000 and he receives$4,500 in financial aid from other sources, his parents canborrow up to $2,500.

Unlike Stafford Loans, PLUS Loans feature neither a graceperiod during which no payments are due nor any periodduring which interest doesn’t accrue. In other words, assoon as the parents cash the PLUS Loan check (or themoney from a PLUS Loan hits your account at college),the interest clock starts ticking. If you’re a parent withone of these loans and you want to maintain your creditrating, you must start paying off the PLUS Loans immedi-ately and continue paying on a regular basis until thedebt (and its interest) is completely repaid.

Perkins LoansFederal Perkins Loans are loans guaranteed by the U.S.Department of Education and are available for undergrad-uates and graduate students. Unlike Stafford Loans, how-ever, Federal Perkins Loans have a fixed rate of interestand are made by your college or other institution (thegovernment gives the college the money, and the collegedistributes it). Federal Perkins Loans can’t be subsidizedby the U.S. Department of Education.

The Perkins Loan program is determined based on threefactors: when you apply, the level of need as determinedby your college, and the funding level of your school.Schools generally pay out Perkins Loan payments twice ayear, and they usually disburse the money by check to

Make Use of Federal Loans 141

09_401170-ch03.qxp 7/24/08 12:33 AM Page 141

you or by direct deposit to your student account.Typically, you have ten years to pay back any funds dis-bursed under the Federal Perkins Loan program, and youmake your checks out directly to your school. You have agrace period of nine months after you graduate, leaveschool, or fall below part-time status before you mustbegin to repay your Perkins loan. Under certain condi-tions (such as active military duty), you may also deferpayment for a longer period of time.


09_401170-ch03.qxp 7/24/08 12:33 AM Page 142

143#50

Defer or Discharge Student Loan Debt

Under special circumstances, you can receive adeferment on the repayment of your federal stu-

dent loans. In some circumstances, you may also be ableto have your entire debt forgiven (or to use the technicalterm, discharged).

To be eligible for deferment, your loan can’t be in default.If it is, contact the holder of the loan and get back on asatisfactory payment program. And you must keepmaking payments until you receive approval for defer-ment. You can’t simply contact the loans office, ask forthe deferment, and then stop paying.

Deferring a Stafford LoanIn some cases, you may receive a deferment of yourStafford Loan if you’re unable to find full-time employ-ment after you graduate or if you experience severe eco-nomic hardship. Many Peace Corps volunteers, forexample, are eligible for Stafford Loan deferment basedon economic hardship.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 143

In some cases, you may be able to cancel your StaffordLoan debt if you qualify under one of the following spe-cific circumstances:

� You become a full-time elementary or secondaryteacher for five consecutive years in an area thatserves low-income families.

� Your school closes before you can complete yourprogram.

� Your school doesn’t pay out your loan amount.

� You file for bankruptcy and the bankruptcy courtdecides that your student loan needs to be discharged.

� You die or become permanently disabled, makingwork impossible.

Putting Off Perkins PaymentsYou automatically get a nine-month grace period with aPerkins Loan, but you may be able to postpone repay-ment even longer:

� If you’re unable to find work on a full-time basis,deferring your Perkins Loans repayments for up tothree years may be possible.

� If you encounter severe economic hardship, youmay be able to defer your repayments for up tothree years.

� If you become a community service worker in suchprofessions as law enforcement, corrections, orteaching in designated low-income areas, you maybe able to defer your Perkins Loans indefinitely.


09_401170-ch03.qxp 7/24/08 12:33 AM Page 144

Out and out cancellation of your Perkins Loan debt isalso possible. Examples of situations that may qualify forup to 100 percent of the loan being discharged includebut are not limited to the following:

� Becoming a full-time special education teacher or ateacher of children with diagnosed learning disabili-ties at an elementary school, a secondary school, ora nonprofit institution

� Performing early intervention services for the eld-erly on a full-time, professional basis

� Serving as a full-time law enforcement or correctionsofficer

� Becoming a full-time staff member in the educationdivision of a Head Start Program

And up to 70 percent of your Perkins Loan can be for-given if you enlist in the AmeriCorps VISTA Program orbecome a Peace Corps volunteer.

Defer or Discharge Student Loan Debt 145

09_401170-ch03.qxp 7/24/08 12:33 AM Page 145

146 #51

Consolidate Your College Loans

A Consolidation Loan helps students and parents sim-plify the college loan repayment process. As you

may guess from its name, a Consolidation Loan combinesor consolidates various student loans that are activeunder your account.

Consolidation Loans are also useful whenever you wantto extend your repayment duration from a maximum of10 years allowable under the Standard Repayment Planassociated with the Stafford Loan to a maximum of 30years allowable under the Consolidation Loan program.Besides extending the repayment period, a ConsolidationLoan also offers potentially lower monthly payments,albeit for a longer overall repayment period. In addition,a Consolidation Loan can offer a way out when you’vedefaulted on your loan.

You can secure a Consolidation Loan from two sources:

� Direct Consolidation Loans are available directlyfrom the U.S. government, specifically from the U.S.Department of Education.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 146

� FFEL Consolidation Loans are available from a vari-ety of participating banks, credit unions, and otherlending institutions.

You can get more information about Consolidation Loanoptions from the Loan Origination Center’s ConsolidationDepartment at 800-577-7392 or on the Web at www.loanconsolidation.ed.gov.

Consolidate Your College Loans 147

09_401170-ch03.qxp 7/24/08 12:33 AM Page 147

148 #52

Find College-BasedScholarships

Colleges have resources to help you reduce theamount of tuition you pay. Most financial aid officers

will work to help you apply for everything that may beavailable, but you must take the first step by asking fortheir help. Sometimes, asking for help is as easy as check-ing a box on the applicable financial aid form. Studentswho win more money go the extra mile by asking collegefinancial aid officers for help and advice.

� College-based scholarships: These awards arefunded by an existing endowment that’s been givento the college by alumni or other interested parties.These scholarships may be need-based, merit-based, or a combination of the two.

� External scholarships or grants administered bythe college: These awards are funded by an endow-ment held by a third party, typically outside the col-lege. The college administers the scholarship, butyou may need to apply for it separately from yourgeneral admission application.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 148

149#53

Access State and LocalScholarships

Local scholarships tend to offer money to fewer stu-dents than their state or federal counterparts —

often only one student per year. But because fewer stu-dents apply for these scholarships, you may have betterchances of winning these awards than the big-moneynational scholarships. Talk to the following people andgroups to find out about these scholarships:

� High school guidance counselors and teachers:The first person to talk to about getting free moneyis your high school counselor. Part of his or her jobis to keep up on grants, scholarships, and loans thatmay be available for students from your school. Talkto your teachers about the colleges they attendedand ask them for scholarship help. Even if yourteacher has no specific information, he’ll probablymake a good reference if you decide to apply to hisalma mater.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 149

� The local Parent-Teacher Association: Some PTAsadminister scholarship programs, and most haveinformation about them. If the person you talk withat the PTA isn’t helpful, ask to be given access to thenational association of PTAs. The national associa-tion is busy, but it’s an excellent source of contactsif you have time and patience.

� Local government officials: Some local scholarshipprograms operate virtually by word of mouth, sotalk with your local government representatives.Drop in on the office, explain that you’re looking forlocally based scholarships, and ask for the appropri-ate person.

� Chamber of Commerce: Your local Chamber ofCommerce should be able to help you identify topbusinesses in town. Sometimes a Chamber ofCommerce offers a scholarship of its own, but this israre. Look around to see which companies sponsorthe Little League teams — companies that like to seetheir names on the backs of young athletes may alsoenjoy the prestige that comes with a scholarshippresentation ceremony.

� Banking community: Scholarships are held inendowments, and someone has to administer theseendowments. Talk to the manager of your bank andany other banks in the area to find out about anygrants or scholarships they administer.

� Places of worship: Like service organizations, reli-gious institutions are parts of regional, national, andinternational organizations. Awards may be avail-able from any level. Ask!


09_401170-ch03.qxp 7/24/08 12:33 AM Page 150

151#54

Tap Organizations forScholarships

Undoubtedly, you have an inkling that some organi-zations offer scholarships, but you may not know

which organizations to approach. Following is some help:

� Service and social clubs: The Elks Club, Lions Club,Rotary Club, 4-H Club, Boy Scouts and Girl Scouts,and Greek organizations (college fraternities andsororities) are just a few examples of service andsocial clubs.

� Foundations formed by corporations, groups, orindividuals: These foundations include large organi-zations with multiple awards, midsized organiza-tions, and small organizations offering as few as onescholarship a year.

� Employment or trade groups: Professional organi-zations, trade unions, and military service organiza-tions fall under this category.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 151

152 #55

Accept Work-StudyOpportunities

Federal Work-Study is frequently offered in your finan-cial aid package. You don’t get paid much (at least

minimum wage), but Federal Work-Study jobs have threedistinct advantages:

� These jobs are supposed to be associated with yourfield of study, and therefore, they help you gain rele-vant experience. Of course, a chemistry major mayget a job washing out test tubes — not necessarilygreat to put on the ol’ resume!

� Unlike an off-campus job delivering pizzas in whichyou’re fully taxed on your wages, income from Work-Study jobs is eligible for deduction from your modi-fied adjusted gross income (MAGI). The end result isthat Work-Study jobs let you keep more of yourhard-earned money than a regular off-campus job.

� Work-Study jobs are usually based around yourclass time; the same isn’t always true with off-campus jobs that often interfere with your school-work or study time.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 152

153#56

Negotiate Better Financial Aid

After you apply to colleges and they offer you theirpackages, you can try to negotiate a better deal. As

you do so, keep in mind that financial aid offices have aset amount of need-based and merit-based funding theycan disperse, and they want to know they’re getting thebest possible students for the money.

Get More Need-Based MoneyGetting more need-based money is generally your bestoption. You may qualify for more need-based funding forall sorts of reasons, including the following:

� Your circumstances have changed.

� The financial effects of certain parts of your infor-mation may not be properly understood.

� Your assessment may not take into considerationother factors.

When appealing your financial aid package based onneed, make sure you provide as much documentation aspossible to prove the points you’re making.

09_401170-ch03.qxp 7/24/08 12:33 AM Page 153

Get More Merit-Based MoneyNegotiating for more merit-based money is a challengebecause most financial aid officers pledge almost all theirmoney when they send out admissions offers. Still, con-vincing a financial aid officer that you truly should’vebeen offered a greater entrance scholarship based onyour vastly improved final marks or SAT/ACT scores ispossible, depending on the school. If the officer has anydiscretionary budget left, your position may bereassessed. If not, the officer can certainly help you applyfor other sources of funding, including departmentalscholarships and external scholarships.


09_401170-ch03.qxp 7/24/08 12:33 AM Page 154

155#57

Refinance a Fixed-RateMortgage

If you have a fixed-rate mortgage and interest ratesdrop, you may want to refinance the same loan to

reduce your monthly payments. The following tableshows monthly payments for 15- and 30-year fixed-ratemortgages.

Interest Rate Monthly Monthly Payments Payments (30 yr) (15 yr)

6% $600 $843

7% $665 $898

8% $733 $956

9% $805 $1,075

10% $878 $1,104

11% $952 $1,137

12% $1,029 $1,200

09_401170-ch03.qxp 7/24/08 12:33 AM Page 155

As you decide whether to refinance, consider the following:

� Closing costs will add to the principal. Every timeyou redo the paper, a whole assortment of people,from the lender of the title company to theappraiser, get to charge you some sort of fee. Youhave to add these refinancing fees into the loan prin-cipal. If you refinance $100,000 and have $3,100added to your debt because of closing costs, you’rerefinancing $103,100, so your new monthly rate,instead of $665 per month, is actually $687 a month.

� When you plan to move. Your monthly paymentmay go down, but whether that saves you money inthe long run depends on how long it takes to makeback the money you spent for the new loan. Whenyou start the new loan, your first payments goalmost exclusively to interest. If you sell the houseafter two years, your loan balance is $100,930(assuming the $3,100 in closing costs mentioned inthe previous point). You save $2,832 by makinglower payments for two years, but you actually owemore on the loan than you did in the first place.(Had you kept your original $100,000 loan amount at9-percent interest, you’d owe $98,596 on the loanafter these two years.)


09_401170-ch03.qxp 7/24/08 12:33 AM Page 156

Part IV

Living a Recession-Busting

Life

10_401170-pp04.qxp 7/24/08 12:34 AM Page 157

In this part . . .

In tough economic times, sacrifices must bemade. People have to knuckle down, buckle

down, tighten their belts, and pinch pennies —which all sound very bleak and discouraging. Butwhat you really need to do is be smart about whereyour money goes and cut back in ways that don’tfeel like deprivation. With a little planning and afew changes here and there, you can keep yourhousehold humming along quite nicely, thank youvery much. By following the tips in the part, youcan reduce typical household expenses and stillenjoy quite a few of life’s luxuries.

10_401170-pp04.qxp 7/24/08 12:34 AM Page 158

159#58

Develop Good Shopping Habits

Shopping is a necessity as well as a popular form ofrecreation, but it can often feel like a black hole on

your finances. To keep your shopping trips from turninginto a spending frenzy, take time to think about how youcan spend more thoughtfully.

When shopping, always keep the following in mind:Reduce, reuse, and recycle. For example, don’t buy overlyprocessed, prepackaged foods. The more packaging andprocessing involved, the more it costs you. Reduce pack-aged and processed items. Prepackaged groceries gener-ally cost at least twice as much as whole foods. Forexample, you can buy ready-to-heat twice-baked potatoesfor approximately $1 per serving, or you can buy theingredients to make twice-baked potatoes from scratchfor less than 15¢ per serving.

Try to buy whole foods, in their natural state, wheneverpossible: fresh fruit, vegetables, meat, and dairy products.If you’re limiting your fat intake, buy fresh eggs and dis-card half, or even all, of the yokes (the fat is in the yoke).This approach costs you about half as much as thereduced-fat egg substitute in a carton and is much fresher,with no additives, preservatives, or food coloring.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 159

Reduce trash by minimizing your use of paper towels, dis-posable plates and cups, cloth diapers, plastic shoppingbags, and so on. Instead, reuse cloth towels and diapers(they’re much cheaper and much more environmentallyfriendly), and durable plates and cups, and take yourshopping bags with you to the grocery store. Many storescredit you 5¢ per bag for bringing your own. Not only areyou saving money, but you’re also saving landfills. Overthe course of a year, simply reusing these items can saveyou tens of dollars. Just think of how many other itemsthis concept could apply to.

Reduce the number of items you purchase by sharingwith, or renting from, others. For example, if you like togarden, a rototiller comes in handy once or twice a year.Instead of buying a rototiller, consider borrowing onefrom a neighbor or renting one.

Part IV: Living a Recession-Busting Life 160

11_401170-ch04.qxp 7/24/08 12:36 AM Page 160

161#59

See through the GimmicksGrocery Stores Use

G rocery stores spend money to learn how to foolyou into spending more in their store. Whether

they’re enticing you into the store in the first place withsale items or convincing you to buy more expensiveitems, be aware of some of these tactics:

� The aisle switcheroo: If you shop at a particularstore regularly, you know where everything you buyis located in each aisle. Without realizing it, you’vedeveloped a form of tunnel vision and don’t reallysee anything except what you need. When the storerearranges the aisles or moves items from one posi-tion on a shelf to another, you have to look aroundand actually focus on each aisle and every shelf. Bylosing your tunnel vision for a time, the possibilityof something new catching your eye increases dra-matically, and consequently your impulse purchasesincrease, too.

� The store’s layout: Most grocery stores have thesame general floor plan — they keep produce,bread, dairy, and meat products along the edges ofthe store or up against the walls. By putting com-monly purchased items against the farthest wall orway off in a back corner, customers have to walkpast numerous displays and shelves full of goodies.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 161

Shop the edges of the store to save considerably onyour grocery bill. Added benefit: The perimeter carriesthe healthiest items in the store. Your waistline —and your budget — will be healthier.

� The loss leaders: Stores advertise products foressentially zero profit to entice new customers intothe store for the drastically reduced item. They’rewilling to take a loss on selected items because theyplan to recoup their loss through higher sales ingeneral due to the increased traffic. The key totaking advantage of these so-called loss leaders with-out letting loss leaders take advantage of you is tonot give in to temptation.

Check the expiration date on any loss leader pur-chases. Often these items are near their expirationdate and the store is trying to clear them off itsshelves.

� Shelf arrangements: If you want to find the bestvalues on the grocery store shelves, look high onthe top shelves or bend down and look at thebottom shelf. The brand-name and higher-pricedproducts (as well as products designed to enticechildren) are located at eye level, while the generic,store brand, and lower-priced items are in the moreawkward places to see.


11_401170-ch04.qxp 7/24/08 12:36 AM Page 162

163#60

Use Coupons Wisely

The key to effective coupon use is to be organizedabout the process. Every coupon you need but can’t

easily locate is cash slipping through your fingers. Trythose little wallet-shaped coupon organizers you can slipinto your purse or pocket to keep your coupons organ-ized by category. Once a month go through your couponorganizer to check for expired coupons.

To make the most of your coupon savings, follow thesesuggestions:

� Look for double- and triple-coupon deals.

� Look for coupons for items that are already on saleor that are deeply discounted.

� Don’t assume you get the best deal with the coupon;store brands can still be cheaper.

� Don’t plan your shopping list around the manufac-turer’s coupons you’ve collected; instead make yourregular shopping list first, and then go to yourcoupon wallet and see whether you have currentcoupons for the items you’re buying.

� When shopping online, look for online coupon codesto save on the purchase price or on shipping andhandling charges; just type the name of the siteyou’re shopping at and coupons into your favoritesearch engine to see what you find.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 163

164 #61

Target Seasonal Grocery Sales

In addition to in-store sales and offers, many fooditems go on sale at regular times from year to year. For

example, March is National Frozen Food Month in theUnited States, and to celebrate this prestigious event,most grocery stores offer significant discounts on frozenfoods during the month of March. Throughout the rest ofthe year, other food items are seasonally offered at dis-counts. The lower prices usually reflect what’s currentlygrowing at local farms.

The following list includes food items you can find onsale or at the lowest prices each month of the year:

� January: Turkey, apples, grapefruit, oranges, andpears

� February: Post–Valentine’s Day candy and chocolates

� March: Frozen vegetables, meats, breakfast items,and TV dinners

� April: Eggs, broccoli, and cauliflower

� May: Soda, hot dogs, hamburgers, buns, asparagus,and pineapple

11_401170-ch04.qxp 7/24/08 12:36 AM Page 164

� June: Dairy products and tomatoes

� July: Strawberries, raspberries, blueberries, corn,cherries, squash, watermelons, cantaloupes, toma-toes, plums, peaches, and nectarines

� August: Squash, green peppers, salad fixings,berries, apples, melons, peaches, apricots, and freshfish

� September: Apples, broccoli, cauliflower, andcanned goods

� October: Pumpkins, cranberries, grapes, oranges,sweet potatoes, and yams

� November: Turkey, sweet potatoes, yams, and post-Halloween bags of candy

� December: Oranges, apples, and grapefruit

Target Seasonal Grocery Sales 165

11_401170-ch04.qxp 7/24/08 12:36 AM Page 165

166 #62

Plan Your Meals Economically

Whether you’re feeding yourself or a family, meal-times present a challenge when you want to save

money without sacrificing your favorites. You wanthealthy, tasty menus that everyone will enjoy and thatwon’t send your budget into cardiac arrest.

Find a Breakfast You and Your Wallet Will Love

With $5 boxes of cereal that are gone in a day, breakfastbars not much cheaper, and egg prices going up and up,breakfast can be one of the most expensive meals of theday. Here are ways to save:

� Make homemade versions of frequently purchasedbreakfast items, such as frozen waffles or instantoatmeal. For example, make instant oatmeal athome by briefly whirling oats in the blender or foodprocessor. Then just stir in boiling water as you nor-mally would for instant oats.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 166

� Keep a list of favorite breakfast ideas. Examples ofquick, healthy, and inexpensive options include

• Breakfast shakes or smoothies: Blend a fewice cubes with your choice of fresh or genericcanned fruits and juice.

• Fresh or canned fruit: Whole, sliced, orstewed.

• Omelets: Use up leftover pieces of meat, vegetables, and cheese to keep omelets inexpensive.

• Bagels: Serve toasted and spread with butter;or spread with generic cream cheese. Slicedstrawberries, when they’re in season, andgeneric cream cheese on bagels is an almostdecadent breakfast treat. Look for sales onbagels and stock up. They keep for weeks inthe freezer.

• Mule food: Stir together uncooked rolled oats,raisins, and nuts. Serve cold with milk andyour choice of sweetener (honey, sugar, brownsugar, maple syrup, vanilla, fruit juice, almondextract); or just stir the “mule food” into yourfavorite flavored yogurt. Make this treat inbulk and store in an air-tight container for agreat substitute for brand-name boxed granola.

• Use leftovers: Cold pizza makes a nice break-fast. So does a cheese enchilada and vegetar-ian lasagna.

Brown-Bag It in StyleBringing homemade lunch items with you to work orschool is a surefire way to save money every day during

Plan Your Meals Economically 167

11_401170-ch04.qxp 7/24/08 12:36 AM Page 167

the week. But who says a packed lunch has to be PB&Jand pudding snacks in a paper bag? Turn a bagged lunchinto something special and still save a boatload of moneyevery week with these tips:

� Be creative with your menu: Vary your menu fromday to day to keep your palate happy. Even if youlike the routine of a sandwich every day, be creativewith the side dish.

� Spice it up: Add fresh herbs (fresh basil sprinkledover leftover pasta, for example) or fancier condi-ments (horseradish for the roast beef sandwich).

� Go for the extraordinary: Instead of run-of-the-millcheese cubes, pack a variety of cheeses (cheddar,parmesan, and brie, for example) with a coupleslices of shaved ham, a few olives, some fruit, andcrackers. Trade up the white bread for crusty rollsor baguettes. Roll the grapes in sugar, or take alonga small container of chocolate sauce for dippingyour fruit.

� Set your table: You may not be able to re-create theambience of a five-star restaurant in your office orcafeteria, but you can make lunchtime more enjoy-able by using a linen napkin, a real plate (or reason-able facsimile), and genuine flatware. Keep theseitems in your office if transporting them is a hassle.

� Take your time: Meals are meant to be savored,even when you have only 15 minutes in which to eat.So turn off the phone, turn away from the computer,and enjoy your lunch.


11_401170-ch04.qxp 7/24/08 12:36 AM Page 168

Save on Scrumptious DinnersLiving well involves setting priorities; if yours includebeing healthy and omitting needless spending, you knowthat dinnertime makes it difficult to stay on track. The fol-lowing list offers a few ideas to help you save time andmoney and still end up with a great dinner:

� Serve breakfast for dinner: Bacon and eggs may bea fairly expensive breakfast to serve the family, butit’s a very cheap meal compared to most dinnermenus. For a healthier alternative, use turkey baconor sausage, or try a veggie-filled frittata. Making anoccasional breakfast for dinner can be a real treat.

� Focus on the sides: If you’re not a vegetarian, thinkof meat as a side dish rather than the main course. Asmall serving of chicken with a large tossed saladand a generous serving of steamed vegetables orrice is better for you and can save tremendouslycompared to having the meat be the largest item onyour dinner plate.

� Serve salad. A chef salad, for example, includes alittle meat and a lot of vegetables, and it’s evenbetter and less expensive if the vegetables are inseason.

Plan Your Meals Economically 169

11_401170-ch04.qxp 7/24/08 12:36 AM Page 169

170 #63

Save on Snacks

Kids thrive on the classic after-school snack, but adultsare often in need of a healthy pick-me-up as well. Givethese healthy, frugal snack options a try:

� Crackers with toppings: Spread peanut butter orcream cheese on a cracker, or top with sliced meatsand cheeses.

� Assorted cheeses: Serve cubed or sliced cheesesalone or with apples, crackers, celery, or meats.

� Popcorn: Sprinkle popcorn with flavored salt orParmesan cheese for a nice change of pace.

� Fresh fruit in season: Limit this healthy afternoonsnack to one piece of fruit per person or the costcan quickly become prohibitive.

� Cut-up veggies: Keeping cut-up celery, carrots, cauli-flower, broccoli, or other veggies on hand and easilyaccessible in the fridge makes healthy snacking apiece of cake or, in this case, a piece of vegetable.

� Cinnamon toast: Toast the bread, spread the butter,sprinkle on a bit of sugar and cinnamon, and you’regood to go.

� Mock ice cream sandwich: Put 2 tablespoons offrozen whipped topping between two chocolategraham crackers, wrap it in wax paper, and freezefor a half hour. It tastes just like an ice cream sand-wich, but it’s healthier (especially if you use lowfatwhipped topping) and less expensive.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 170

171#64

Stretch One Meal into Two (Or More)

Tossing a glob of warmed-up old noodles onto a platedoesn’t entice many appetites. But if you use a little

creativity, leftovers can be fun, tasty, inexpensive mealstarters. By camouflaging the leftovers from meal tomeal, even your pickiest eaters will have trouble recog-nizing the roasted chicken from dinner two nights ago intoday’s pasta salad luncheon.

Make a Leftover BuffetPlan one meal each week that uses up the assorted left-overs accumulating on the refrigerator shelves. It’s likegetting a free meal every week.

After accumulating about half a dozen containers of left-overs, reheat them in the microwave and portion out alittle bit of everything onto each person’s plate.Generally, nobody ends up with more than a spoonful ortwo of any one item, but the variety of items gives it thelook of a full plate after you’ve gone through a buffet lineat a party: a dab of lasagna, a slice of roasted chicken,half a black bean enchilada, a forkful of several types of

11_401170-ch04.qxp 7/24/08 12:36 AM Page 171

salad. Toss some crackers, sliced cheese, and fresh cut-up veggies into the mix, and you have an easy dinner thatthe whole family enjoys.

Sandwich Your Leftovers into Savings

A favorite use for leftovers is to make sandwiches forlunch or dinner. Whether it’s leftover roast beef madeinto French dips, or sliced meatloaf with mayo andketchup, or an open-faced turkey sandwich smothered ingravy, your family will love the results. Rolling leftovermeats and veggies into a cold, flour tortilla with a bit ofcream cheese and a pickle is also a delicious way to addsome variety to the typical sandwich presentation.

Stretch the BirdChicken and turkey are dreams come true if you want tostretch one meal into several others. For a family of four,you can usually stretch at least three meals from eachchicken purchase: a roast chicken dinner meal consistingof the drumsticks, thighs, and wings; a casserole, stir-fry,or skillet meal prepared with the cut breast meat roastedthe night before; and a hearty, homemade chicken soupmade from any leftover meat and bones. Each time youbuy a chicken, plan ahead for the three chicken meals.

Turkeys, because of their size, can yield even moremeals. Round one can be a turkey dinner with all thetrimmings. Then from the leftovers, create casseroles,sandwiches, stir-fry, pot pies, you name it. After you pickthe bones clean of meat, make a turkey broth (follow thesame recipe to make a chicken broth):


11_401170-ch04.qxp 7/24/08 12:36 AM Page 172

1. Place the carcass in a 6-quart saucepan.

2. Add 2 carrots and 2 stalks of celery cut into 1-inch pieces and one onion, peeled and whole.

3. Fill the pot with enough water to cover by 1inch. Bring to a boil over high heat.

4. Lower heat to a simmer and cook for 11⁄2 hours.

5. When cooled to room temperature, remove anddiscard the carcass and vegetables.

6. Pour the liquid though a fine strainer. Seasonthe broth with salt and black pepper to taste.

Stretch One Meal into Two (Or More) 173

Make your own mixesFor the sake of convenience, you probably buy premade and prepack-aged products (such as salad dressing, taco seasoning, and cookie andcake mixes). Going homemade is not only cheaper, but also considerablyhealthier. You can choose which ingredients to use, and you also knowthat no flavorings, colorings, or preservatives are added.

Find recipes for convenience items by looking at the ingredient lists onthe package and getting a good idea of what to use, browsing throughall-purpose cookbooks and cooking-related books at the library, and log-ging on to www.recipesource.com/misc/mixes or www.frugalitynetwork.com/frugalrecipes.mixes.html.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 173

174 #65

Save on Baby Food

Frugal hardly seems like a word to use in the samesentence as “baby food,” which can really take a bite

out of the ol’ budget. But buying the expensive prepack-aged baby foods isn’t the only way to feed baby. You havenumerous less expensive (and more healthful) options:

� Breastfeed: The least expensive baby food availableis the mother’s milk: it’s free. If you can breastfeedyour little one, you save a bundle compared tobuying formula, and you’re also providing your babywith the best possible nutrition. Even if you’re work-ing full time outside the home, breastfeeding is stillan option. For breastfeeding tips, contact a localbreastfeeding organization such as La Leche League(www.lalecheleague.org), or ask your local hospi-tal or doctor’s office to recommend a certified lacta-tion consultant.

� Process your own baby food: Serve your baby tinyservings — well-processed in the blender or foodprocessor first — of most anything the family isalready eating: potatoes, carrots, peas, or evenhomemade chicken soup. Take care to leave outspices and any additives in baby’s portion.

Prepare a large batch of baby food at one time soyou don’t need to do it at every meal. For example,cook and puree a big bunch of carrots, freeze the

11_401170-ch04.qxp 7/24/08 12:36 AM Page 174

puree in ice cube trays, pop out the frozen foodcubes, and place in labeled zip-top freezer bags.When your baby’s ready to eat, just take out a frozencarrot cube, thaw it, warm slightly, and dinner isserved.

� If you buy premade baby food, buy the largest jarsavailable. The little bitty jars may be meal-sized forbaby’s tiny appetite, but they’re expensive too.When you open a large jar, spoon out a small por-tion onto a plate or bowl, and then cover the jar andrefrigerate it. The large jar of food lasts for abouttwo meals this way, rather than just one.

� Dilute regular juice to give to baby: The specialbaby juice at the grocery store is really nothingmore than diluted regular juice. Just buy regular 100-percent juice in frozen concentrate form (with noadditives or sweeteners), but then add twice theamount of water (or more) recommended whenyou’re reconstituting the juice.

Save on Baby Food 175

11_401170-ch04.qxp 7/24/08 12:36 AM Page 175

176 #66

Cook Up Money Savings

Eating out often can zap your budget, but busy sched-ules make it difficult to find the time to fix healthy,

tasty, and economical home-cooked meals. The sugges-tions here can help.

Cook in BulkThe idea of cooking in bulk and freezing the premademeals puts off many people. They hear terms referring tomonthly cooking or 30-day cooking, and they roll theireyes. But think of it more as a concept. If you don’t havethe freezer space, the energy, or organizational where-withal for a full month of cooking in one pop, try twice-a-month, or even once-a-week. Or just double and triplerecipes as you prepare them.

Here’s how bulk cooking works: When you make chili,make enough for three meals. Eat one tonight, and thenpackage the extra in labeled freezer bags. You now havetwo meals ready to go in just minutes for those nightswhen you’re in a hurry. Just pop the freezer bag in themicrowave or pour the thawed chili into a pan on thestovetop, toss together a green salad, and dinner isserved.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 176

For additional savings, plan your bulk-cooking sessionsaround the supermarket’s sales. Suppose, for example,that your grocery store has whole fryers on sale. You buythe maximum number of fryers the store allows (four inthis example) and do a chicken mini-session: You cut upthe fryers, and then prepare and freeze the followingmeals:

� Two or three meals’ worth of marinated thighsand drumsticks in plastic freezer bags. The chickenmarinates while it’s frozen and also while it thaws.You can use homemade Italian-style salad dressingfor a marinade or generic or store-brand dressing.To serve, thaw completely, pour off the marinade,and then cook the chicken pieces on the barbecueor under the oven broiler.

� Two meals of chicken cacciatore. A tasty freeze-ahead version consists of sliced chicken breast, a jarof spaghetti sauce, stewed tomatoes, and somesautéed onions and green pepper strips. Thaw thecacciatore and serve it over pasta or rice.

� Several meals’ worth of cooked chicken. Cut thechicken into medium-sized chunks to use in skilletmeals or casseroles. Having freezer bags with pre-cooked and frozen chicken pieces makes later mealpreparation a snap.

� A large pot of homemade chicken noodle soup.Soup is usually good for at least two meals, maybemore, depending on how hungry the troops arewhen they’re ready to eat.

Be sure to vary your menus to keep your family happy.Even when foods are dressed differently, few people likethe same thing night after night. Just because you’ve pre-pared all these chicken-based meals doesn’t mean youhave to serve them one day after another.

Cook Up Money Savings 177

11_401170-ch04.qxp 7/24/08 12:36 AM Page 177

To ensure your meals are thawed and ready to heat up atdinner time, plan your dinners two days in advance. Mostfrozen casseroles, for example, take about 48 hours to thaw.

Use a Slow CookerA slow cooker is both convenient and a money saver.When you come home at dinnertime, dinner’s nearlydone, eliminating the temptation to run out for somethingquick (and usually less healthy and definitely moreexpensive). But slow cookers can save you money inother ways:

� You can cook larger meals, providing leftovers andpossibly a second meal from one cooking time.

� You can buy tougher (and less expensive) cuts ofmeat because the slow cooker acts as a tenderizer.

� Meat shrinks less when cooked in the slow cookerand doesn’t dry out. Also, flavors have time todevelop while your meal cooks all day.

� A slow cooker doesn’t use as much electricity as anoven, nor does it heat up the kitchen nearly as muchas the stovetop or oven, so it’s a perfect hot-weathercooking appliance.

� A slow cooker frees up oven and stovetop spaceduring a large cooking session for the freezer.

� Tofu, an inexpensive meat substitute, tastes bettercooked in a slow cooker because it has time to soak upthe flavors of the broth, spices, and other ingredients.

A pressure cooker has many benefits similar to the slowcooker and is also much faster. If you don’t have all dayfor your meal to simmer on the counter, the pressurecooker is a great option.


11_401170-ch04.qxp 7/24/08 12:36 AM Page 178

179#67

Can It!

Home-canning is a safe and economical way to pre-serve high-quality food. If you love fresh ingredi-

ents, like working in the kitchen, and want to creategourmet-quality specialty foods for less than you’d spendin the gourmet aisle of a supermarket, you can savemoney and eat well with a little effort. The money savingscomes from two factors:

� With a well-stocked pantry of canned produce, youcan eliminate or significantly reduce having to buyexpensive alternatives.

� The best produce for canning is fresh, fresh, fresh.You’re lucky if you grow your own fruit or veggies,or have a friend who shares hers with you. Or youcan buy in bulk from farmers markets when the pro-duce is in season. Some growers offer a “pick yourown” option, which is even cheaper yet.

Types of CanningAlthough you may hear of many canning methods, onlytwo are approved by the United States Department ofAgriculture (USDA):

11_401170-ch04.qxp 7/24/08 12:36 AM Page 179

� Water-bath canning: This method uses a large kettleof boiling water. Filled jars are submerged in thewater and heated to an internal temperature of 212degrees Fahrenheit for a specific period of time. Usethis method for processing high-acid foods, such asfruit, items made from fruit, pickles, pickled food,and tomatoes.

� Pressure canning: Pressure canning uses a largekettle that produces steam in a locked compart-ment. The filled jars in the kettle reach an internaltemperature of 240 degrees Fahrenheit under a spe-cific pressure (stated in pounds) that’s measuredwith a dial gauge or weighted gauge on the pressure-canner cover. Use a pressure canner for processingvegetables and other low-acid foods, such as meat,poultry, and fish.

In both of these methods, your filled jars of food areheated to a high temperature that destroys microorgan-isms and produces a vacuum seal. Produce a safe prod-uct by using the correct method for the food type,following the recipe instructions to the letter, and com-pleting each processing step.

Canning with SuccessFollow these tips for achieving success as a home canner:

� Start with the freshest, best products available.

� Know the rules and techniques for your canning orpreserving method.

� Work in short sessions to prevent fatigue and poten-tial mistakes.


11_401170-ch04.qxp 7/24/08 12:36 AM Page 180

� Stay up-to-date on new or revised guidelines foryour preserving method.

� Use the correct processing method and processingtime to destroy microorganisms.

� Know the elevation you’re working at.

� Put together a plan before you start your preservingsession.

Can It! 181

Grow your own produceWhether you have a large or small yard (or no yard at all), you can growa garden that drastically cuts down your produce bill five months out ofthe year. Here’s how:

� Pick a prime location. The garden should get six to eight hours ofsun a day and be in close proximity to both your house and the watersupply. Or try container gardening, which works wonders on smalldecks and patios.

� Decide what veggies to grow: Start with about four or five easy-to-grow varieties of vegetables (such as tomatoes, bush beans, lettuce,cucumbers, and zucchini) — whatever your family eats regularlyand works well with your soil and climate conditions. For specificsabout regional growing recommendations for your area, consult alocal home and garden center or ask your friendly gardening neigh-bors what they suggest.

� Weed and enjoy!

11_401170-ch04.qxp 7/24/08 12:36 AM Page 181

182 #68

Other Ways to Save in the Kitchen

Every tip helps when you’re trying to save money inthe kitchen, so here’s a list of easy ideas to help cut

the cost of family meals.

� Keep lettuce fresh longer by rinsing and drying itthoroughly. (Use a salad spinner, if available.) Thencut the lettuce into salad-size pieces (use a lettuceknife to reduce the risk of bruising), place in a zip-top bag, try to get all the excess air out of the bag,and then store the bag of lettuce in the refrigerator.Each time you use some of the lettuce, press the airout again. Lettuce keeps for as long as a week thisway if it’s dry before you place it in the bag.

� Don’t rinse produce until you’re going to use it; oth-erwise, it can mold and get slimy faster.

� Save the bits and pieces of leftover pie crust in a zip-top bag in the freezer. When you have enough in thebag, you can make another pie crust or two from thethawed pieces.

� Use half the amount of meat called for in the recipewhen making a casserole or skillet meal, and thenadd inexpensive vegetables or pasta to fill in for themissing meat.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 182

� Stretch ground beef in hamburgers, meatloaves, andmeatballs by stirring in cut-up bread crusts, oat-meal, homemade bread crumbs, cracker crumbs, orplain cereals. This is a great way to use up stalecrackers.

� Use turkey hot dogs instead of beef or pork. Turkeyis often half the price.

� Buy blocks of cheese when they’re on sale, grate,and place in a large zip-top freezer bag. Use it asneeded. If the cheese clumps together in the freezer,bang the bag against the kitchen counter to loosen.

� Buy eggs when they’re on sale and freeze for lateruse in baking, omelets, and scrambled eggs. Don’tfreeze the eggs whole; crack each egg into a sectionof a clean plastic ice cube tray. When frozen, removethe egg cubes from the tray and package in a large zip-top freezer bag. Use as needed. The thawed out eggsshould be used quickly — they’re very perishable.

� Fill the oven with baking potatoes when you have toheat it up to bake a few potatoes for dinner. Eattonight’s potatoes, cool the leftover ones, and freezein zip-top bags. For a quick and inexpensive meal orside dish, reheat the frozen potatoes in themicrowave.

Other Ways to Save in the Kitchen 183

11_401170-ch04.qxp 7/24/08 12:36 AM Page 183

184 #69

Save on Salon Expenses

When you’re trying to be a conscientious consumer,salon visits pose a dilemma. On the one hand, vis-

iting a stylist once every six weeks is a luxury you cansurely do without. On the other hand, looking and feelinggood is darn near priceless. The key is to find a balancethat lets you have your cake and eat it to. Here are someideas:

� Negotiate services with your stylist.

� Extend time between visits.

� Go to a discount salon or a beauty college betweenvisits with your regular stylist.

� Trim your own bangs to extend the life of your stylebetween salon visits.

� Cut your kids’ hair yourself rather than taking themto the salon. They don’t need the extra pamperingjust yet.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 184

185#70

Expand Your Wardrobe

Dressing well doesn’t have to equal dressing expen-sively. A great place to find clothing is at thrift

stores and garage sales. Even if your family’s wardrobeconsists of almost nothing but secondhand clothing, youcan all still look great. The following sections suggestother ways to expand your child’s wardrobe without deci-mating your budget.

A wardrobe of basic colors and simple styles makes mix-and-match dressing practical, easy, and much less expen-sive than buying outfits made of pieces that can only beworn with each other.

Make the Most of Hand-Me-Downs

Using hand-me-downs is a wonderful way to save moneyand recycle still serviceable clothing items. If you havefriends and family with kids slightly older than yours, askthem to save their children’s outgrown clothing for you.Most parents are happy to save clothes for a friend, butmay not know who’s interested in their hand-me-downs.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 185

Exchange ClothingStart a regular group clothing exchange throughout theyear. Here’s how it works: Everyone brings her family’soutgrown or discarded clothing to someone’s home, dis-plays it on a table, and then sorts through everyoneelse’s castoffs to find clothing for her own family. At theend of the exchange, the leftovers are boxed up anddonated to a thrift store.

Shop Seasonally and Plan AheadAt the end of each season, you can find huge savings onseasonal clothing items. The best selection of clothes isusually at the beginning of the season, but the best bar-gains are at the end. Watch for seasonal sales at localstores, where you can stock up on items you’ll usethroughout the year.

If you’re buying for your kids and you see an excellentprice, stock up on larger sizes. Your kids can grow intothem as time passes.

Save on School ClothesWait until the school year begins to buy the bulk of yourkids’ school clothing, so they can see what’s in style andwhat’s out of fashion. Waiting until after school startsallows you to take advantage of clearance sale prices atdepartment stores, thrift stores, and secondhand shops.


11_401170-ch04.qxp 7/24/08 12:36 AM Page 186

If you want to dress your kids in designer duds for dis-count prices, look online at auction sites such aswww.ebay.com. You can also score brand-name clothingand accessories at consignment stores.

Expand Your Wardrobe 187

Modify your driving techniquesThese driving techniques can help you save fuel:

� Arrange your car seat as comfortably as possible.

� Start and accelerate slowly and smoothly.

� Obey the speed limits, especially in city traffic.

� Try to stay in your lane.

� Set a steady pace.

� Build up speed slowly before you get to a hill.

� If you have a manual transmission, shift into higher gears as soonas possible.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 187

188 #71

Remove Stains from Clothing

Here are some ideas to try for some common stub-born stains:

� Baby formula: Apply stick stain remover as soonas possible. Let it sit overnight, and then launder asusual. If the stain persists, soak overnight in a solu-tion of non-chlorine bleach mixed with warm water(use 1⁄4 scoop bleach per gallon of water). Launderagain.

� Blood: Rinse immediately with cool water. Hotwater sets the stain and makes it harder to remove.Dab hydrogen peroxide on white fabrics. If the stainpersists, soak overnight in a solution of non-chlorinebleach and warm water.

� Chocolate: Rinse immediately with cold water. Ifthe stain persists, soak overnight in a solution ofnon-chlorine bleach and warm water.

� Grass: Apply a stick stain remover immediately.Let sit overnight. Wash as usual. Or pretreatovernight in non-chlorine bleach mixed with water.

� Gravy: Rinse thoroughly in cold water as soon aspossible. If the spot is dry, soak it in cold water forseveral hours. If the stain remains, apply liquid dish-washing detergent directly to the stain. Squeeze the

11_401170-ch04.qxp 7/24/08 12:36 AM Page 188

detergent into the fabric so it gets between thefibers. Let sit overnight. Rinse thoroughly in coldwater, and then wash as usual.

� Ink: Apply stick stain remover as soon as possible.Gently work stain remover into the fabric. Let it sitfor several hours before washing. Launder in coldwater.

� Juice: Pretreat with liquid dishwashing detergentor stick stain remover. Wash as usual in hot water.Repeat pretreatment and laundering if necessary.

� Ketchup: Rinse the stain in cold water immedi-ately. Soak the garment in cold water for severalhours. Launder in cold water. If the stain remains,use stick stain remover, let sit overnight, and laun-der again.

Remove Stains From Clothing 189

11_401170-ch04.qxp 7/24/08 12:36 AM Page 189

190 #72

Reconstruct Your Clothes

Reconstructing clothing is the practice of creatingnew clothes from existing garments. Some examples

of this include

� Adding a simple hood to a jacket

� Cutting the sleeves off a T-shirt

� Turning your sheets into a skirt

� Cropping a sweater

� Creating a couture evening gown from an old duvetcover

When it comes to saving cash, reusing and reconstructingclothes just can’t be beat.

Types of ReconstructionPeople with all levels of sewing skill can reconstructclothes. Creative types who don’t like to use patternsexcel at this, and it’s a fun way to make old or out-of-styleclothing new again.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 190

Mind-altering alterationsSometimes clothing is just fine in its present form, but itneeds a little something. Maybe you want to add a littlepizzazz and individuality to your garment, or maybe youwant to fix a poor fit, hide stains, or spruce up a worn ’n’torn favorite.

Lots of clothing is well-made and practical. But it can alsobe boring and can look exactly like every other piece thatwas mass-produced from the same factory! Some lessintense reconstruction techniques serve to elevate yourho-hum hoodie to a truly unique piece of self-expression:

� Sewing a hem with contrasting color thread

� Taking in a seam with the seam placed externally

� Decorative patching on wear ’n’ tear

� Decorative stitching on patches and hems

� Decorative painting over stains

These techniques are exciting for all levels of skill andcreativity. And they’re perfect for those pieces that you’reon the fence about banishing from your closet! Plus youhave lots of no-sew options with this method.

Clothing for clothWhat do you do when your heart can’t let go of a piece,but you can’t bear to see it hang wastefully in the storagecloset? Dismantle the existing garment, creating flatfabric that you can salvage and incorporate into otherthings, like a quilt. You may choose to do this for a vari-ety of reasons:

Reconstruct Your Clothes 191

11_401170-ch04.qxp 7/24/08 12:36 AM Page 191

� The fabric is gorgeous but the garment is horrible

� The garment shape can’t be maintained because ofstyle or other pitfalls

� The garment is excessively large

� The fabric is an oh so precious vintage

� The fabric is of high quality, such as silk

� The fabric has extensive beadwork or other embell-ishments that you want to save

� The garment has sentimental significance, but thestyle and fit aren’t for you


11_401170-ch04.qxp 7/24/08 12:36 AM Page 192

193#73

Find Fun in CommunityResources

Before you plunk down your hard-earned money tojoin a gym or for various types of entertainment and

activities, consider what your community has to offer —usually at little or no cost!

� Community swimming pools

� Gymnasium or exercise classes

� Community center

� Local parks or jogging trails

� County libraries

� Museums and galleries

� Concerts

� Festivals

11_401170-ch04.qxp 7/24/08 12:36 AM Page 193

194 #74

Have Fun in Your OwnBackyard and Beyond

The family activities highlighted here are not only funand cost next to nothing, but they also help build

family relationships because you spend time togetherpursuing enjoyable pastimes.

Take a Family Field TripA meaningful family field trip can be simple, like taking aleisurely walk down a local nature trail and watching a pairof red squirrels do aerial acrobatics. Or extend the fieldtrip and follow the path of Lewis and Clark across theUnited States for a long — but relatively inexpensive —educational family vacation. Even camping in your ownbackyard can be an adventure of sorts. Here are the rules:

� Choose an event the entire family enjoys. Theweekly “What’s Happening?” section of the newspa-per and monthly issues of regional parenting maga-zines — often available for free in libraries andbookstores — provide a never-ending variety ofactivities that appeal to the entire family, frompreschoolers to adults. Also, your local library may

11_401170-ch04.qxp 7/24/08 12:36 AM Page 194

offer classes, readings, and live performances forkids. Check your library’s bulletin board for noticesabout family-friendly activities and attractions.

� Do a little pretrip planning. A little advance plan-ning can make for a more enjoyable — and lessexpensive — trip. Before you leave home, packsome inexpensive snack supplies and drink bottles,confirm driving directions, check on admissionprices, and check your destination’s Web site forany “online only” coupons (this would also be agood time to check for unanticipated park closuresor hour changes).

Discover the Games People PlayFamily games can be enjoyed whenever you want someinexpensive entertainment and time together. Institute afamily game night.

If you don’t have a closet full of board games, you canacquire them inexpensively at garage sales and thriftstores. If someone asks what to get you or your family fora gift at the holidays, suggest a board game.

Board games aren’t the only family-friendly games to playon a family game night. Do you remember Charades? Howabout Spoons? Twenty Questions? Hide the Thimble?Spotlight Tag? Rummy? Crazy Eights? Delve into therecesses of your mind and try to remember the gamesyou played as a kid. The games may be old to you, butthey’re new to your kids!

Have Fun in Your Own Backyard and Beyond 195

11_401170-ch04.qxp 7/24/08 12:36 AM Page 195

Plan a Movie NightGoing out to a movie can be real treat — and, given theprice of tickets nowadays, even matinees can break thebank. But even if heading to the Cineplex is no longerwithin your budget, you don’t have to forego the enjoy-ment of watching films. Rent a video, pop some corn, andinvite the kids to a movie night.

Check out churches and libraries where you can oftenborrow movies for free. If you have cable television, keepyour eye on the movie listings. You can record moviesearly in the week to watch on the weekends. Moviesrecorded from the television are not only free, but theyalso save you a drive to the video store or library.


11_401170-ch04.qxp 7/24/08 12:36 AM Page 196

197#75

Save for a Family Vacation

Finding money in the family’s budget for a trip — largeor small — can be challenging but not impossible. If

you cut back on smaller activities during the year, youcan pocket the money you save and put it into your vaca-tion fund. Here are some ideas for saving a little here anda little there to fund a family getaway:

� Watch movies on television.

� Save all your loose change in a jar.

� Have a yard sale.

� Sell some clothing at a consignment store.

� Babysit or work a part-time job during the schoolyear.

� Tally up the money you save by using coupons atthe grocery store each week and put that amount ina vacation fund.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 197

198 #76

Travel on a Few Dollars a Day

All travel seems to have the same basic expenses:food, accommodations, and fun activities. What you

spend on these things can amount to a lot or a little. Thedifference depends on where you go, how you get there,and what you do when you get there.

Choose Less-Expensive Travel Times

If possible, take your vacation during off times. Themonths of May and September (in the NorthernHemisphere) are especially good times to travel becausethey’re not as hot as July or August, they’re not primetourist season, and the weather is usually nice. Manyresorts offer a schedule of rates, showing their peak andoff-seasons. To maximize your money and enjoyment ofavailable perks, make your reservation for the week justbefore the peak time starts or right after it ends.

Be aware that “off times” in your area may not be “offtimes” at your destination. Holidays and regular breaksfrom school (winter and spring break, summer vacationfrom school) are also usually expensive times for travel.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 198

Book Affordable AccommodationsAccommodations are often one of the most expensiveparts of any vacation. But less-expensive alternativesexist:

� Camping: If you have a tent or a trailer, you canoften pull into a campground almost anywhere andfind a spot to sleep for about $40 per night for thewhole family.

� Hotels: If you plan to stay at a hotel, be sure to askabout special prices or seasonal deals when you callto make a reservation. Depending on when you’retraveling, ask about Sunday nights, which are oftenslow and hotels offer cheaper rates to encouragecustomers to stay.

Call during the day when the office staff are on duty.They’re more likely to know what special discountsor rates the hotel is offering.

� Home swaps: Working out a house swap with friendsor family who live in different cities or countries canbe a great way to get a vacation for no more than thecost of airfare and food. For more information onhouse swapping, visit www.homelink.org or do aWeb search for house swapping.

� Timeshares: If you travel often, buying the right touse a condo or home during particular weeks of theyear can be a good money-saving idea in the longrun. (Remember: If you buy a timeshare from theowner instead of from the resort or developer, yousave substantially.)

Travel on a Few Dollars a Day 199

11_401170-ch04.qxp 7/24/08 12:36 AM Page 199

Traveling in a group can cut accommodation costs. Takea vacation with some other families or your in-laws. Renta big house at the ocean or stay in a mountain lodge andhave everyone split the cost.

Eat Well for LessDon’t eat all your meals in restaurants. Here are someideas for restaurant alternatives:

� If your hotel or motel offers a free breakfast, take fulladvantage of it.

� Eat a huge breakfast, and then have a light lunch offruit and cheese or an energy bar.

� Visit a local supermarket and pick up the ingredientsfor a picnic. Make your own sandwiches, grab a bagof chips, and buy whatever soda is on sale.

� Stay hydrated. Thirst can be mistaken for hunger,and getting something to drink is usually a lotcheaper (think water fountain) than getting some-thing to eat.

� Carry snacks with you so you’re not tempted to buypricey snacks to satisfy your hunger pangs.

You’ll likely want to eat in restaurants at least part of thetime — you’re on vacation, after all. Plan your main mealaround lunchtime. Restaurants’ lunch menus are similarto dinner menus, but the cost is greatly reduced.


11_401170-ch04.qxp 7/24/08 12:36 AM Page 200

Plan for Fun, Not FlashOne of the best ways to save money on vacation is tounder-plan activities. You don’t have to see everything.Three major activities per area or per city is a good aver-age. Or no more than two major activities per day. Spendthe rest of your time just hanging out and wanderingaround.

Look into the cheap — or free! — activities your destina-tion offers: hiking, walking on the beach, making sandcastles, having a campfire, star-gazing, fishing, crabbing,or swimming.

Travel on a Few Dollars a Day 201

11_401170-ch04.qxp 7/24/08 12:36 AM Page 201

202 #77

Save on Phone Bills

Keeping in touch by phone is an expensive proposi-tion, so cutting back on the monthly phone bill is a

welcome relief to many pocketbooks:

� Check your phone bill and make sure you’re notpaying for extra services you never use or don’tneed. If you have an answering machine, you proba-bly don’t need voice mail from the phone company.If you have voice mail but no answering machine,consider buying one. Owning your own machine isless expensive over time than paying monthly feesfor voice mail.

� Check to see whether your phone company offers aflat rate or a measured service plan that can saveyou money based on how often you call or on thetimes and days you usually use the phone.

� Use a cellphone for long-distance calls. (Most planscharge a flat fee a set number of minutes that youcan use for both local and long-distance calls.) If youuse your landline for long-distance calls, make themin the evenings and on weekends, when rates areusually lower. If you make a lot of long-distancecalls, find a calling plan that suits the amount ofcalls you make.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 202

� Look into Internet phone services that offer free orreduced plans. For example, if you (and the personyou want to call) have webcams, you can use Skype(www.skype.com) to make free video calls anywherein the world.

� To save money on cellphone bills, look for plansthat offer minutes the entire family can share or thatoffer free minutes if you call in-network; instead ofgetting a phone for each child, get a single phoneyour children can share; examine your monthly billto see how you’re using your minutes and, if youconsistently have minutes left over, ask about drop-ping to a cheaper plan.

� Investigate package deals. Getting phone, Internet,and TV service from one provider can often saveyou money.

� Send an e-mail (it’s free) or rediscover the joys ofletter writing. Sending cards and letters via the U.S.Postal Service doesn’t have to cost much more thanthe price of a first-class stamp if you watch for spe-cials on stationery while you’re shopping.

Save on Phone Bills 203

11_401170-ch04.qxp 7/24/08 12:36 AM Page 203

204 #78

Stay Cool on the Cheap

Following are some ways to stay cool, even when it’shot outside:

� To drop your cooling (and heating) bills dramati-cally, add insulation to your home. First insulateyour attic floor, and then when time and moneyallow, add insulation to your basement, exteriorwalls, floors, and crawl spaces (in that order).

� Improve attic ventilation: Adequate ventilationunder the eaves allows cooler air to enter and circu-late throughout the attic. If you don’t have a perma-nent exhaust fan, you can set a box fan with the airflow pointed outward to pull the hot air out of thehouse.

� Shade your house from the sun: If your house isn’tshaded by trees, install awnings over any windowsthat are exposed to direct sun during the day. Manyawnings are removable and adjustable, so you aren’tstuck with them when you don’t need them.

� Cover your windows: Windows are a major sourceof heat during the summer. Reduce the heat comingin through your windows by closing the drapesduring the day, adding reflective window tint tosouthern windows, and hanging old-fashionedbamboo shades on the outside of heat-producingwindows.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 204

� If you use an air conditioner to cool your house,turn the thermostat up a bit higher than the tem-perature you usually set. If you normally set theA/C for 72 degrees Fahrenheit during the summer,switch to 78 degrees. When it’s 95 degrees in theshade outside, 78 degrees still feels comfortable andnot too warm. Also set the temperature higher fortimes when you’re not there.

� Use fans to circulate air. Moving air feels severaldegrees cooler than still air. A ceiling fan can coolthe whole room, but even a small box fan or oscillat-ing fan keeps the air moving.

� Reduce how much heat you create inside yourhouse: Use your outdoor grill more often to keepfrom heating up the kitchen. Cook in the microwave,slow cooker, electric skillet, or toaster oven, ratherthan the stove and oven. Don’t use the heat settingon your clothes dryer.

Stay Cool on the Cheap 205

11_401170-ch04.qxp 7/24/08 12:36 AM Page 205

206 #79

Warm Up for Less

Stay cozy and still save money on your heating billsby following these hints.

Turn Down the ThermostatThe simplest way to save money on heating is to turndown your furnace a couple degrees. If you usually keepyour thermostat set at 72 degrees Fahrenheit during thewinter, turn it down to 70. If you’re used to 70-degree tem-peratures, set the thermostat at 68. Lower the tempera-ture even further at night when you’re sleeping. Toss onan extra blanket if you’re still a bit chilled.

Consider these other ways to stay warm without runningup your heating bill:

� Close the vents and doors in rooms that aren’t inuse for long periods of time.

� A ceiling fan set to push air down keeps warm aircirculating to the lower regions of the house.

� Higher humidity keeps the air warmer. Here are acouple of simple ideas to add warm moisture:

• Let steamy air from the bathroom escape intothe rest of the house after a shower.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 206

• Boil water on the stovetop.

• Keep a kettle or pan full of water on top ofyour wood-burning stove or radiator.

Deal with DraftsA well-insulated house can help you save quite a bit onyour heating bills (and cooling bills, too). New houses areoften built with energy-efficient features such as thermal-paned windows, well-insulated walls, and energy-efficientwater heaters and furnaces. If you don’t live in a newerhouse, consider using some of the following ideas toincrease the benefits of your home’s current heatingsystem.

� Add a layer of air between your windows and thegreat outdoors (the air insulates much better thanthe window glass alone). Some ideas:

• If you have storm windows, use them.

• Stretch thick sheets of plastic across theinside of your window frames.

• Hang heavy curtains that you can pull closedat night. During the day, open your curtains,especially those on southern windows, forpassive solar heating.

• After dark, hang blankets or quilts in front ofthe windows for added insulation. Install adecorative curtain rod above your existingwindow treatment, and then simply fold ablanket or quilt over the rod.

Warm Up for Less 207

11_401170-ch04.qxp 7/24/08 12:36 AM Page 207

� Use a draft stopper at the bottom of outside doors.You can make one, buy an inexpensive one, or rollup a bathroom towel and place it next to the bottomof the door.

� Fill areas behind electric switch plates that are onoutside walls with plastic foam or purchase plasticinsulation that’s already cut to size and made forthis purpose.

� Close the flue on your fireplace when you’re notusing it. Leaving a fireplace flue open is like having avacuum hose hooked to your house, sucking thewarm air right out the chimney.


11_401170-ch04.qxp 7/24/08 12:36 AM Page 208

209#80

Make Your Own CleaningSolutions

You don’t need a cabinet full of the latest cleanersfrom your local supermarket. Rather, a few simple

household ingredients can provide all you need to keepyour house and appliances sparkling.

Three inexpensive and commonly available householdproducts — white vinegar, baking soda, and bleach —can replace a variety of store-bought cleaners.

Many people also use ammonia as a cleaning staple. Ifyou do as well, remember that ammonia combined withbleach or some other cleaning agents produces a toxic,or even deadly, gas. Never never never mix ammonia withany other cleaning product. For that matter, never mixany household cleaners, regardless of brand or type.

All cleaners, whether commercial or homemade, workbest when left to sit for varying periods of time.Generally, the tougher the stain, the longer you let it sitto work.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 209

White VinegarFull-strength white vinegar is an excellent cleaning optionthat kills many germs, bacteria, and molds. Keep a spraybottle of full-strength vinegar around the house, andspray it on countertops, toilet seats, doorknobs, andeven cutting boards. Vinegar helps deodorize, and youcan use it in your wash and get the same results as store-bought detergent additives.

Here are a few easy ideas for cleaning around the housewith vinegar:

� Use full- or half-strength vinegar for cleaning win-dows, mirrors, chrome, and tile. (Wash your win-dows with newspapers to cut down on the lint leftbehind from cloth or paper towels.)

� To easily clean the microwave oven, heat 1⁄2 cup ofwhite vinegar in a microwave-safe bowl or mug onhigh for 3 minutes. Let the vinegar sit undisturbedfor about 15 minutes, and then remove the vinegarcontainer and wipe down the inside of themicrowave with a sponge and clear water.

� Use full-strength vinegar in the rinse-aid container ofyour dishwasher.

� Use about 1 cup of white vinegar and 1⁄4 cup ofbaking soda (in addition to your laundry detergent)in place of store-bought bleaching products towhiten and brighten your clothes.

� Add 1⁄2 cup of white vinegar to the rinse cycle orpour it into the washing machine’s fabric softenercontainer to remove any leftover soap residue fromthe clothes. The clothes will smell clean and fresh.


11_401170-ch04.qxp 7/24/08 12:36 AM Page 210

Baking SodaYou can find bulk containers of baking soda in the bakingsupplies aisle of the supermarket. Baking soda is fairlyinexpensive normally, but when you buy it in bulk, it’sreally a bargain. Baking soda works well for the followingcleaning needs:

� Mix a 50/50 paste of baking soda and water forscrubbing bathtubs, tile, sinks, chrome, and potsand pans. Rinse thoroughly with water.

� Add about 1 teaspoon of baking soda to 1 cup ofwater, stir, and use in a spray bottle with a fine mistsetting for an easy and inexpensive air freshener tospray around the room.

� Sprinkle a thin layer of baking soda in the bottom ofthe cat’s litter box (before adding the kitty litter) tohelp cut the smell. Fluffy will thank you, and this canalso prevent the need to buy more expensivedeodorized kitty litter.

� Add about 1⁄4 cup of baking soda to the washingmachine’s rinse cycle as a fabric softener and odorremover.

� Use a paste made from a mix of 50/50 baking sodaand water to pretreat spots before putting theclothes in the wash.

BleachWhen it comes to killing germs and removing householdmildew, you won’t find a less expensive disinfectant andcleaning agent than common household bleach. Here aresome simple cleaning ideas that use bleach:

Make Your Own Cleaning Solutions 211

11_401170-ch04.qxp 7/24/08 12:36 AM Page 211

� Use a 50/50 mixture of bleach and water to removestubborn stains and mildew from tile and grout.

� Pour a 50/50 bleach-and-water mix into tea cups orcoffee mugs with difficult stains. Allow them to soakovernight. The next day, pour out the bleach andwater and wash the cup as usual.

� Mix 1 cup of bleach with 1 gallon of water for gen-eral cleaning and disinfecting, but be careful not tolet the bleach mixture touch fabrics or anything thatcan have color bleached out of it (such as carpets,window treatments, clothing, and so on).


Spend less on lightingAfter appliances and heating, indoor and outdoor lighting is one of thebiggest electricity users in an average home. Cut down on the number oflight bulbs turned on at any one time to save substantially on your elec-tric bills. Here are some easy tips for lighting-related savings:

� If you have outdoor lighting for safety reasons, install motion detec-tors on the lights. They’ll still come on when you need to see yourway or if an intruder needs to be scared away.

� Replace frequently used light bulbs with fluorescent bulbs. They’rea bit more expensive to buy, but they often last up to ten times longerthan incandescent bulbs.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 212

213#81

Replace a Roof Shingle

Because shingles become more flexible when warm,this task is best saved for a sunny day. Here’s all

you have to do:

1. Fold back the shingle(s) above the one to beremoved.

2. Use a flat pry bar to remove the nails that holdthe damaged shingle in place.

3. Slip a new shingle in position to replace the onethat was removed.

4. Nail the new shingle in place by using a flat prybar as a hammer extension.

With this technique you can drive a nail in frombeneath an overlapping shingle: First, press thenail into the shingle by hand. After the nail is inplace, position the bottom of the flat bar so thestraight end rests atop the nail head. As thehammer strikes the flat bar, the offset belowdrives the nail home.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 213

214 #82

Find Roof Leaks

The first step in repairing a roof leak is finding its point oforigin. Although finding a leak on a flat roof can beextremely difficult and should be left to an industry pro-fessional, do-it-yourselfers can find a leak on a pitchedroof. To water test your roof, you need two people, oneon the roof and one in the attic (or living space below ifyou don’t have an attic). You also need the followingtools:

� 1 ladder

� 1 garden hose

� 1 flashlight

Although water testing a pitched roof isn’t a difficultprocess, it can be time-consuming and tedious, so bepatient. Follow these steps:

1. Station your partner in the attic and tell him orher to holler at the first sign of water.

2. Use the garden hose to run a modest amount ofwater over the roof at a point below the areawhere a leak is suspected.

Work from the lowest point of the roof (near theeaves or gutters) in an area about 4 to 6 feetwide. Work your way up the roof a couple of feetat a time. Stand on dry roofing above the water tohelp prevent a slip.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 214

Don’t run the hose full blast. Don’t use a spraynozzle, and don’t force the water between theshingles. Doing so may force water into thehome, creating the illusion that you’ve found aleak when, in fact, you did nothing more thantemporarily create one.

3. The moment your helper sees water, he or sheshould let you know.

A wailing screech usually does the trick. Or useyour cellphones to communicate without yelling.

After you find the leak, hire a contractor to repair it.

Find Roof Leaks 215

11_401170-ch04.qxp 7/24/08 12:36 AM Page 215

216 #83

Add More Insulation

Most home-maintenance projects save you moneyover time. But only a few of them produce an

immediate and measurable return. Maintaining an energy-efficient home is one such project, and one of the bestways to do this is to make sure everything’s properlyinsulated.

Attic InsulationIf you have loose fill insulation, look to see whether theinsulation in your attic has shifted. If some areas of yourceiling are bare, solve the problem by using a plastic lawnrake to gently move the insulation from high spots ontothe bald areas. (Be sure to use a plastic rake; with electri-cal wires present in the attic, it wouldn’t be wise to use ametal rake.) You can also use a piece of batt insulation tocover a hole. Simply use a razor knife to cut batt insula-tion to the approximate length required and lay it inplace.

If your insulation appears to be in good shape, but youstill feel a chill, you may need to add more. Check withyour local public utility or a local building inspector foradvice on what to do.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 216

Keep attic insulation clear of light fixtures. If the lightboxes are covered with insulation, they can overheat, anda fire can result. And above all, don’t plug attic vents. Anattic must be able to breathe; otherwise, trapped hot aircan convert even the best insulated home into a sweat-box on a hot summer day. In addition, a buildup ofhumidity can occur, which over time can result in woodrot, mildew, mold, and fungus growth.

Wall InsulationAdding insulation to a wall is a bit more difficult thanadding it to an attic. In an attic, the insulation is usuallyexposed. In a wall, the insulation resides between theinterior and exterior wall coverings. To insulate a wall,you have to either remove the wall covering or createsmall penetrations and blow the insulation into the wallcavity. It’s simply not cost-effective to remove a wall cov-ering to insulate the wall cavity. Therefore, blown insula-tion is usually used to insulate the walls of a completedhome.

Because wall studs are spaced every 16 inches or so, pen-etrations to add insulation must be made at the sameintervals, thus filling one cavity at a time. In some homes,a horizontal block exists midway between the top andbottom of a wall cavity. In such cases, two penetrationsmust be made into each cavity: one above the horizontalblock and one below it.

Floor InsulationAn insulated floor substantially reduces the loss of heat,helps to eliminate mildew- and rot-causing condensation,

Add More Insulation 217

11_401170-ch04.qxp 7/24/08 12:36 AM Page 217

and generally helps to keep your toes warm when you gobarefoot through the kitchen.

Periodically crawl beneath your home with a flashlight tocheck the condition of the floor insulation in your base-ment or sub-area. You want to ensure that it’s properlypositioned. Sagging is the biggest problem. Floor insula-tion is normally held in place (between the floor joist)with netting or bailing wire attached from one joist-bottom to another. If the insulation netting sags, reattachor replace it.

Lightning rods (named for their speedy installation) are ahandy alternative to netting or bailing wire when main-taining sagging floor insulation. These lightweight, flexi-ble steel rods hold the insulation in place by springtension. You place one end of the rod against the side of afloor joist and bend it slightly so the other end is forcedinto place against the face of the opposite joist. Use onehand to hold the insulation up and the other hand towhip the lightning rod into place.


11_401170-ch04.qxp 7/24/08 12:36 AM Page 218

219#84

Insulate Pipes

Putting insulation around all accessible water pipessaves energy, prevents freezing during most moder-

ate to medium chills, and reduces condensation whenpipes flow through attics and crawlspaces.

Properly maintained pipe insulation can be cheap insur-ance. A pipe that bursts in the attic can destroy a sub-stantial portion of your home before the leak is stopped.

Be sure the tape that holds the insulation in place is ingood shape, and make sure the insulation is still in goodcondition, as well. If either the insulation or the tapecrumbles to the touch, the material should be replaced.

Pre-formed, tubular, foam pipe insulation is slit length-wise for easy installation. All you have to do is open theslit and lay the insulation onto the pipe. Pipe insulationcomes in 6-foot lengths and is easy to cut with scissors ora razor knife.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 219

220 #85

Insulate Heat Ducts

As with other kinds of insulation, the material thatsurrounds your heat ducts reduces energy costs

while improving the effectiveness of your central heatingand cooling system. It also helps prevent unwanted con-densation in attics and crawlspaces, thereby reducing thechance for mold, mildew, and the foul odors associatedwith them.

Wrap insulation around and around the duct in acorkscrew fashion. Air currents, rodents, house move-ment, and vibration in the heating system can cause theinsulation to loosen and fall away from the ducting. Whileyou’re there, add an extra layer if your budget allows. Itcan’t hurt.

You can hold insulation together by “stitching” a nail intoit. Simply insert the nail the same way a seamstress usesa sewing pin to hold two pieces of fabric together.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 220

221#86

Test and Fix a Window Air Leak

Air leaks mean excessive energy loss — and cost.Summer or winter, you don’t want your house to

leak air, especially when you spend your hard-earned dol-lars warming or cooling it.

Test a window for leaks by holding a lighted candle nearall its joints and connections. If the candle flickers, youhave an air leak. Check

� Where one section of the window meets another

� Where the windows meet the frame

� Where the frame meets the wall

To fix air leaks, try these tactics:

� Caulk around the window: Often air leaks at awindow result from a breakdown in the connectionbetween the frame of the window and the frame ofthe house. To prevent leaks, caulk the windowwhere its frame meets the exterior siding. If thewindow is surrounded by wood trim, seal all gapsbetween the trim and the siding (and the trim andthe window frame) with a high-grade polyurethanecaulk.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 221

� Replace the weatherstripping: Leaks occur whenweatherstripping wears out. You may have toremove the operable portion of the window to findthe weatherstripping. Most home centers sellreplacement weatherstripping in peel-and-stick rolls.If you aren’t sure about what to do, take the sectionyou removed to the store with you, or snap a pictureof the area that needs attention and take it with you.A picture is definitely worth a thousand words!

� Inject foam sealant between the frame of thewindow and the frame of the house. This is a majordeterrent to air infiltration and also prevents waterfrom leaking into the house.


11_401170-ch04.qxp 7/24/08 12:36 AM Page 222

223#87

Stop Air Leaks around Doors

An air leak in a door frame is pretty common. As themoisture content changes in soil, your home shifts.

Your doors also shift, creating gaps large enough for adump truck to pass through.

You can add foam sealant between the frame of the doorand the frame of the house by removing the interior doorcasing. The casing is the wood trim that covers the jointbetween the door frame and the wall. Use a flat pry bar toslowly remove the trim so you don’t damage it.

Other air leaks can occur between the door and the doorframe. This is where weatherstripping is handy. It doesn’tmake any difference whether the exterior door is paintedor stained, large or small, solid wood or French style, thesame type of weatherstripping can be used.

An easy-to-find and -install weatherstripping consists of arubber bead attached lengthwise to a strip of metal.Standing outside the door, with the door in the closedposition, gently press the rubber portion of the weather-stripping against the door and frame at the same time.Attach the metal section of the weatherstripping to thedoor frame with the nails or screws provided. Here,oblong holes allow the weatherstripping to be adjustedlater as house movement causes the door to shift.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 223

224 #88

Identify Plumbing Leaks

Water leaks can be expensive, not only for thedamage they cause (think rot and mildew), but

also because you’re stuck paying for the leaking water,even if, as is the case with some leaks, you don’t knowyou have one.

If you’re on a public water system, you have a watermeter somewhere on or near your property. Besidestelling you how much water you’re using, it can also helpyou detect leaks.

Take a meter reading, and then turn off every plumbingfixture in your house (including the built-in icemaker orother water-consuming appliances) for a couple of hours.After everything is off, take another meter reading. If thereading changes, you have a leak. You can tell how muchwater you’ve used in any given timeframe by subtractingthe first reading from the second reading. A cubic footcontains 71⁄2 gallons of water.

If you find a leak, you need to identify where it’s comingfrom and fix it or call a professional to help out.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 224

225#89

Improve Water HeaterEfficiency

If your water heater is located in a garage or basement,or you don’t want the heat the water heater emits into

the area, install a heavy insulation blanket — R-11 orbetter. Doing so improves the water heater’s energy effi-ciency and reduces the ambient heat. The R value relatesto the thickness of the blanket; the higher the R value,the thicker the blanket, and the more insulating horsepower.

You can purchase a water heater insulation blanket as akit based on the size of the heater — 30, 40, 50 gallons,and so on. The kit contains a blanket that has white vinylon the outside and raw insulation on the inside andenough adhesive tape to finish the seams.

If you have a gas water heater, wrap the blanket all theway around and from the top to just below the controller.Don’t worry if the blanket seems a bit short. Remember,the bottom of the tank is several inches above the verybottom of the water heater.

Don’t wrap the top, because the insulation could catchfire from the heat being exhausted. Also, the blanket

11_401170-ch04.qxp 7/24/08 12:36 AM Page 225

shouldn’t cover the controller, the anode, or the pressureand temperature relief valve.

If you have an electric water heater, wrap the sides andthe top (an electric water heater doesn’t have anexhaust). But don’t cover the access panels for elements;otherwise, these could overheat.

You don’t need a blanket if your water heater is locatedwhere its lost heat can be felt and appreciated. Nor doyou need one if you have a new water heater that’s fac-tory insulated with R-16 or better. The manufacturer’slabel will tell you how much insulation your water heatercontains (the factory-installed insulation is locatedbetween the metal shell and the tank, so don’t freak if youcan’t see it).


11_401170-ch04.qxp 7/24/08 12:36 AM Page 226

227#90

Help Your Furnace Work More Efficiently

The best way to ensure that your heating system is asenergy efficient as it can be is to do routine mainte-

nance. (If you have an electric system, it requires virtu-ally no maintenance. In fact, you have to do only twothings: Vacuum the convectors once a month [if you havethem] and pay the electricity bill.)

Routine annual inspection and cleaning by a qualified,licensed contractor can keep your system running formany years without trouble. Don’t be pennywise andpound-foolish. A dirty, inefficient furnace costs you tentimes that much in wasted fuel. Beyond that, you can dothe following:

� For forced-air systems: Replace the furnace filterregularly (every month during the heating season,and every month year round if an air-conditioningsystem is part of the same system) and check theducts, which distribute warmed air to various loca-tions throughout the house, for leaks. If you see fuzzor feel warm air coming out through the jointsbetween duct segments, seal them with metal tape.

Although filters cost only a couple of bucks apiece,don’t buy filters one at a time — get a whole case.They’re cheaper by the dozen.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 227

� For hot-water systems: Most hot-water systemshave only a single gauge, which measures threethings: pressure, temperature, and altitude (theheight of the water in the system). It’s important tomonitor the pressure. Most boilers run with only 12to 15 pounds of pressure. The boiler can becomeseriously damaged and even dangerous if the pres-sure exceeds 30 pounds. If the pressure is abnor-mally high, you may have a waterlogged expansiontank that can be drained. You can drain the expan-sion tank yourself (use the owner’s manual for infor-mation or a home-maintenance book for guidance)or call a repairperson.

You also may need to bleed the air out of the radiator.To do so, just turn the bleed valve about a quarter-turn counterclockwise and keep the screwdriver orradiator key in the valve. If you hear a hissingsound, that’s good — it’s air escaping. As soon asthe hissing stops and you see a dribble of watercome out, close the valve.

Don’t open the valve more than is necessary; hotwater will come rushing out before you can close it.At the very least, you’ll make a wet mess. At thevery worst, you could be scalded.

� For steam systems: Most adjustments to your steamboiler should be performed by a pro. But you can dothree important things yourself:

• Check the steam gauge on a regular basis.Make sure it’s within the normal range. If itisn’t, shut the system down immediately andcall for service.


11_401170-ch04.qxp 7/24/08 12:36 AM Page 228

• Check the safety valve every month. Locatedon the top of the boiler, this valve ventsexcess pressure if the boiler goes crazy andexceeds safe levels. When the system is hot,push down on the handle to see whethersteam comes out. Make sure to stand awayfrom the outlet — the steam is boiling hot. Ifno steam comes out, call a serviceman toreplace the valve immediately.

• Check the water level once a month. Thewater-level gauge has valves on each side.Open them both and make sure the water levelis in the middle, and then close the valves. Ifyou don’t see any water, shut off the boiler, letit cool down, and add water.

Help Your Furnace Work More Efficientl 229

11_401170-ch04.qxp 7/24/08 12:36 AM Page 229

230 #91

Save on Your Fuel Expenses

Reducing your speed is one way to save on fuel.Getting a car with better gas mileage is another.

While anyone can do the former, you’re probably notgoing to seriously consider doing the latter unless you’rein the market for a new car anyway. Regardless of the caryou have, you can do several things to maximize yourfuel efficiency.

Look under the HoodYou may be surprised at all the “little” things that cannegatively affect your gas mileage:

� A dirty air filter can cause you to lose 1 mile pergallon at 50 miles per hour.

� A poorly functioning PCV valve, which recycles theexhaust fumes back into the intake manifold to bere-burned, makes your engine run less efficiently.

� Spark plugs that misfire can cost you up to 25 per-cent in gas mileage.

� Accessory belts (those that connect your fan, waterpump, alternator, and a variety of other devices)that are too loose or too tight can result in a seriousloss of efficiency.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 230

� A poorly adjusted brake may “drag” while the vehicleis in motion. The result is that your brake linings —and the gas in your tank — won’t last as long.

Take a look at these parts of your vehicle and make surethat they’re in good condition and are functioning prop-erly. A simple tuneup can reduce carbon monoxide andhydrocarbon exhaust emissions by 30 to 50 percent, saveyou fuel, and improve your vehicle’s performance. If youcan cut your fuel consumption by only 10 percent, yousave an average of 77 gallons a year!

Fill ’Er UpWhat you do at the pump affects your fuel consumptionand can save you money as well.

In hot weather, fill up in the early morning or evening,when the air is cooler. Like everything else, gasolineexpands with heat. An increase of 30 degrees can cause10 gallons of gas to expand by as much as four-fifths of aquart — that’s as much as a bottle of whiskey!

Save on Your Fuel Expenses 231

11_401170-ch04.qxp 7/24/08 12:36 AM Page 231

232 #92

Change Your Own Car Oil

Changing oil is easy. In fact, unless your oil filterand/or oil drain plug is impossible to reach, you

have good reasons to change your oil and oil filter your-self. It’s cheaper, you know that the job’s being doneright, and it requires little time or effort.

You’ll need these supplies: oil and an oil filter (make sureit’s the right one for your car), an adjustable wrench (tounscrew the oil drain plug), a container to catch the oil(make sure it’s low enough to fit under your car), afunnel, and some rags.

Follow these easy steps:

1. Warm up your engine for 2 or 3 minutes so thegook gets churned up and can flow out of theengine easily.

You don’t want the engine so hot that you burnyourself. When it’s slightly warm, shut off theengine.

2. Look under your car to find the drain plug.

The drain plug is a large nut or plug locatedunder the oil pan at the bottom of the engine. Ifyou can’t reach your oil drain plug easily, you’ll

11_401170-ch04.qxp 7/24/08 12:36 AM Page 232

have to either crawl under your car to reach it orjack up the car.

3. Push the container under the oil drain plug so itcan catch the oil.

4. Protecting your hand with a rag or some papertowels, unscrew the oil drain plug (be ready tomove your hand out of the way).

The oil now drains out of your engine into thecontainer. While the oil drains, get out fromunder the car and take a look under the hood.

5. Remove the cap from the oil filler hole at thetop of your engine and unscrew the oil filter,using a wrench if you can’t do it by hand.

The oil filter looks like a tin can screwed to theside of your engine. To unscrew it, twist it coun-terclockwise. The filter will have oil in it, so becareful not to spill it when you remove it. If anyremnants of the filter’s rubber seal remain onyour engine, remove them.

On some vehicles, you can easily reach the oilfilter by leaning under the hood. Other car manu-facturers place the filter so it must be reachedfrom under the car. If this describes your vehicle,you’ll have to get under it.

6. Empty the oil from the filter into the drain pan.

After the filter is empty, wrap it in newspaper andset it aside to take to a recycling center with yourold oil.

7. While the old oil drains out of the engine, opena new bottle of oil.

Change Your Own Car Oil 233

11_401170-ch04.qxp 7/24/08 12:36 AM Page 233

8. Dip a finger in the new oil and moisten thegasket on the top of the new oil filter. Thenscrew the new filter into the engine where theold one was.

Follow directions on the filter, or turn it gentlyuntil it “seats” and then give it another three-quarter turn.

Unless the filter manufacturer recommends it, oryour hand can’t fit in the space, don’t use an oilfilter wrench to tighten the filter. It should fittightly, but you don’t want to crush the gasket, orthe filter will leak.

9. Reach under the car again and use your dirtyrag to wipe around the place where the oildrain plug goes.

10. Replace the oil drain plug and use an adjustablewrench to tighten it.

If your vehicle uses an oil drain plug gasket, makesure the old one has been removed and lay a newgasket on the pan before you replace the plug.

11. After you install the oil filter and replace the oildrain plug, use a funnel to pour all but 1 quartof the fresh oil into the oil filler hole.

12. Replace the oil filler cap and run the engine for30 to 60 seconds while you check for leaks fromthe oil drain plug and around the filter.

The oil pressure light on your dashboard shouldgo out in 10 or 15 seconds (or if your car has anoil pressure gauge, the needle should move off“Low”). Your oil pressure is low to zero while thelight is on, until your oil filter fills up. If the lightdoesn’t go out, check under the car and aroundthe engine for leaks. Running the engine circu-


11_401170-ch04.qxp 7/24/08 12:36 AM Page 234

lates oil into the new filter, and because filtershold a half to a full quart of oil, you want to besure that your filter is full to get an accurate read-ing on the oil dipstick.

13. Shut off the engine and wait 5 to 10 minutes forthe oil to settle into the oil pan and then checkthe oil level again.

Remove the oil dipstick, wipe it with a clean, lint-free rag, and shove it back in. Pull it out again andcheck it. Keep adding oil a little at a time andchecking the stick until you reach the “Full” lineon the dipstick.

14. Remove the drain pan from under the vehicleand give the car a test drive.

Go around the block a couple of times; then letthe oil settle down again and recheck the dipstickand the dashboard indicator.

15. Fill out the Maintenance Record at the back ofyour Owner’s Manual (or wherever you keeptrack of your regular auto maintenance).

Dispose of the old oil by taking it to an auto parts store orother oil recycling center.

Change Your Own Car Oil 235

11_401170-ch04.qxp 7/24/08 12:36 AM Page 235

236 #93

Take Care of Your Tires

Tires don’t require a great deal of maintenance, but thejobs in this section will pay off handsomely by

increasing your tires’ longevity, handling, and perform-ance, as well as providing you with a more comfortableride and better gas mileage.

Check Tire PressureThe single most important factor in caring for your tiresis maintaining the correct inflation pressure. You shouldcheck your tires once a month and before every long tripto see that they’re properly inflated. Underinflated tireswear out faster, create excessive heat, increase fuel con-sumption, and make the vehicle harder to handle.Overinflated tires can blow out more easily, wear outfaster, and make the vehicle unstable and unsafe tohandle.

To check the air pressure, you need to buy a tire pressuregauge at a hardware store or auto supply store (they’renot expensive) and determine the proper air pressure foryour tires. Look for the proper inflation pressure on the

11_401170-ch04.qxp 7/24/08 12:36 AM Page 236

tire decal. You can find the tire decal on one of the doors,door pillars, glove box, console, or trunk.

Then follow these steps:

1. Remove the little cap from the tire valve thatsticks out of your tire near the wheel rim.

2. Place the open, rounded end of the tire gaugeagainst the valve so that the little pin in thegauge contacts the pin in the valve.

3. Press the gauge against the valve stem.

You’ll hear a hissing sound as air starts to escapefrom the tire. You’ll also see a little stick emergefrom the other end of the tire gauge. It emergespartway almost as soon as the air starts to hissand stops emerging almost immediately.

4. Without pushing the stick back in, remove thegauge from the tire valve.

5. Without touching the stick, look at the numberson it. Pay attention to the last number showing.

This number is the amount of air pressure in yourtire.

6. Add air if necessary.

If the number on the gauge is lower than the rec-ommended pressure, you need to add air. Followthe steps in “Add Air to Your Tires.”

7. Repeat these steps for each tire, including thespare.

Take Care of Your Tires 237

11_401170-ch04.qxp 7/24/08 12:36 AM Page 237

Add Air to Your TiresIf your tires appear to be low, note the amount thatthey’re underinflated, drive to a local gas station, andfollow these steps:

1. Park your vehicle so you can reach all four tireswith the air hose.

2. Remove the cap from the tire valve on the firsttire.

3. Use your tire gauge to check the air pressure inthe tire and see how much it’s changed so youcan add the same amount of air that the tirelacked before you drove it to the station.

The pressure will have increased because drivingcauses the tires to heat up and the air insidethem to expand.

4. Use the air hose to add air in short bursts,checking the pressure each time with your tiregauge and making adjustments as necessary.

If you add too much air, let some out by pressingthe pin on the tire valve with the back of the airhose nozzle or with the little knob on the back ofthe rounded end of the tire gauge.


11_401170-ch04.qxp 7/24/08 12:36 AM Page 238

239#94

Hire a Pro without GettingTaken for a Ride

Several kinds of shops repair and service vehicles:dealerships, chain stores, specialists, and independ-

ents. Dealerships usually stock a wide variety of originalparts and equipment made specifically for your vehicle,but they’re often more expensive than other types ofservice facilities. Save money by choosing anotheroption. But how do you decide which is the right shop foryou? Each has its drawbacks as well as its advantages.

� Chain and department stores: These are generallyless expensive than dealerships. They usually stocka wide variety of parts, and provide guarantees onparts and labor. Many also accept coupon and dis-count mailers from competitors. The downside isthat the technicians may get a commission on theparts they sell, motivating them to sell you a newpart instead of repairing an old one.

� Independents: Many independent shops are lessexpensive than dealerships. The best independentsoffer honest, reliable, and experienced independentmechanics who provide personalized service basedon high standards of excellence. An unreliable onepatches things together, uses cheap parts, andhopes for the best.

11_401170-ch04.qxp 7/24/08 12:36 AM Page 239

� Specialists: There are two types of specialists: Aspecialized chain store or independent mechanicwho deals with a specific type of repair, such asbrakes, transmissions, or mufflers, or an independ-ent shop that works only on specific makes or typesof vehicles, such as imports, motorcycles, or vans.Check out national chains in consumer publicationssuch as Consumer Reports to be sure that the oneyou choose has a good reputation for durable partsand quality service.

Several organizations test, rate, and certify good servicefacilities or individual technicians. If you’re unsure abouta particular shop, look for a sign or a patch on a techni-cian’s uniform showing that the shop or the individualhas achieved recognition from one of the followingsources:

� AAA- and CAA-approved repair facilities:Approved by both the American AutomobileAssociation (AAA) and the Canadian AutomobileAssociation (CAA).

� ASE-certified technicians: The National Institute forAutomotive Service Excellence (ASE) certifies tech-nicians by testing them on a variety of automobilerepair specialties.

� IGO (Independent Garage Owners Association): AnIGO shield or sign indicates that the owner of thegarage is a member of the IGO, which, although itdoesn’t qualify individual technicians, has a code ofethics that members pledge to live up to if they wantto stay in the organization.

� Better Business Bureau: Check with your localBetter Business Bureau to see whether a shop hasbeen the subject of numerous consumer complaints.


11_401170-ch04.qxp 7/24/08 12:36 AM Page 240

� Referrals: Probably the best way to find a goodmechanic is the same way you find a doctor, lawyer,or plumber — through referrals. Ask people whodrive the same make vehicle as you do where theygo for repairs, and then check out the shops. As afringe benefit of these conversations, you’ll alsoknow which shops to avoid.

Hire a Pro without Getting Taken for a Ride 241

11_401170-ch04.qxp 7/24/08 12:36 AM Page 241


11_401170-ch04.qxp 7/24/08 12:36 AM Page 242

Part V

Making the Most ofHolidays and Other

Special Events

12_401170-pp05.qxp 7/24/08 12:37 AM Page 243

In this part . . .

Holidays and special events are times to celebrate and enjoy. They’re also times

when your budget and bank account can take a real hit. Fortunately, you don’t have to do without;you just have to do a little differently. The key is tofigure out what’s most important and to put yourresources and energy there. If you figure out what’snonnegotiable — spending quality time with yourfamily or giving from the heart rather than thewallet, for example — you may just discover thatalthough you spend less, you give more.

12_401170-pp05.qxp 7/24/08 12:37 AM Page 244

245#95

Throw a Party on a Budget

P lanning a party can be just as fun as attending one.And when your planning lets you save money at the

same time, well, that’s icing on the cake. The simplestand most important trick is to plan ahead and puttogether a party budget.

When you budget for your party, do so before you startshopping. List the items you need and estimate what youcan afford to spend on each item. Keep a running total ofthe expenses so you know when you need to cut cornerson one item because you went over on another.

Check out the following budget-saving ideas:

� Always shop from a detailed list. Impulse buys arecommon in party planning. Those corn-shaped corn-cob holders would be a hit at the barbecue, but arethey necessary?

� Use reuseable tableware. Using real dishes, uten-sils, and glassware can save big money.

� Prepare the food yourself. Bake your own cake orserve sliced homemade snack cakes instead ofordering a personalized cake from the grocery store.

� Make and deliver your own invitations. Save onpostage by hand-delivering invitations to people yousee regularly. E-mail invitations are acceptable forcasual parties.

13_401170-ch05.qxp 7/24/08 1:10 AM Page 245

� Aim for a simple, balanced menu. For a dinnerparty, a simple snack or appetizer, salad or soup,vegetables, and a main course followed by a simpledessert make a nice, well-rounded meal.

The key to entertaining on a budget without sacrificingflair is to think presentation. You can make anything lookspecial: a tray of cold cuts on a bed of curly lettuce, uten-sils standing in a cup tied in ribbon, napkins folded intobirds. And for those extra special occasions when youwant to splurge a little without breaking the bank? Astanding rib roast is a wower, but so is a crown roast —and it’s less than half the cost.

Part V: Making the Most of the Holidays and Other Special Events246

13_401170-ch05.qxp 7/24/08 1:10 AM Page 246

247#96

Entertain on a Shoestring

Do you want to socialize with friends and family whilespending as little money as possible? Keep in mind

that the real focus of the party is the guests — good foodis just an added bonus! Here are a few ideas that areproven winners.

Covered-Dish DinnersHosts provide the main course, and guests bring sidedishes and desserts. The benefits of this type of gather-ing are that no one has too much work or cost to absorband everyone gets to try lots of new and varied dishes.Bring the kids and hire one babysitter or older child to sitor entertain the children in the basement (or in a sepa-rate part of the house), and the adults can visit or playcards upstairs or in the living room.

Wine-Tasting PartyThis type of get-together can be an educational and funexperience (and not to mention thrifty). Here’s how itworks: The host’s responsibilities are to invite friends orfamily, lay out the rules, and provide glasses, crackers,fruit, and cheese for all. Then guests each bring a bottle

13_401170-ch05.qxp 7/24/08 1:10 AM Page 247

of wine. The host predetermines the rules, such as thefollowing: Bring red wine, $10 per bottle maximum, withbottles disguised in paper bags. After all the guests havearrived, randomly number the bags, open the wine bot-tles, and begin the tasting. Discuss the characteristicsand qualities of each wine and vote on your favorite whileenjoying your cheese, fruit, and crackers and the companyof your friends. At the end, unveil the winning selection.

Game NightInvite two to four people over after dinner to play Farkel(a dice game of skill and luck; all you need are six diceand the instructions, which you can find online) oranother game of your choice.


13_401170-ch05.qxp 7/24/08 1:10 AM Page 248

#97

Spend Less on HolidayDecorations and Gifts

You can have festive holiday celebrations withoutdipping into savings or running up a credit card bal-

ance. Use these ideas to jump-start your creativity andsee where your imagination takes you!

EasterAhh, Easter: warm spring weather, newborn bunnies, andfreshly cut tulips. If only those store-bought springtimegoodies, like Easter baskets for the kids and decorationsfor the home, weren’t so expensive. But with a little cre-ativity, you can enjoy the season frugally.

For instance, you can make your own inexpensive Easterbaskets. Use wicker baskets, which last year after year, orbe creative with your choice of container. Paper bags,Easter bonnets, and colorful plastic sand pails are allgreat options. Fill your bags or baskets with treats thatyou accumulate throughout the year — crayons, bubbles,chopsticks, stickers, and little cookies and candies.

13_401170-ch05.qxp 7/24/08 1:10 AM Page 249

HalloweenHalloween costumes don’t have to scare the living day-lights out of your budget. Even a simple homemade gypsyor hobo costume can be loads of frightening fun, espe-cially if the children design it themselves. Make the fol-lowing inexpensive costumes from things found aroundthe house or at thrift stores:

� Ghost: Use a permanent marker to draw somedetails on a sheet, like spider webs or fake blood-stains. If you add an old chain or two and tie a largewhite handkerchief around the top of the child’shead and under his jaw, you’ve created JacobMarley from Dickens’s A Christmas Carol.

� Tacky Tourist: Just put together a Hawaiian shirt,sunglasses, a hat, a camera, white sunblock on thenose (just use white face paint), a large bag orpurse, and maps or tourist brochures peeking out ofa few pockets.

� Ladybug: Dress your child in a pair of black leggingsand a plain long-sleeved black shirt. Remove thearms from a large red sweatshirt (bought at a thriftstore) and pin, glue, or draw large black dots allover and a stripe down the middle of the sweatshirt.Fashion antennae with black pipe cleaners.

Shop off-season to get the best deals. Halloween decora-tions are cheaper right after Halloween; limit yourself toone or two new items at the end of the season and storethem with your current decorations.


13_401170-ch05.qxp 7/24/08 1:10 AM Page 250

Hanukkah and ChristmasHoliday giving and frugal living don’t have to be polaropposites if you follow these easy ideas:

� Create homemade wrapping paper. Make your ownwrapping paper out of brown paper grocery bags,inexpensive kitchen sponges (the softer, the better),and craft paint. Cut open the paper bags and spreadthem flat, with the plain insides of the bags facing up.Cut the sponges into simple holiday shapes (snow-men, trees, stars), dip them into red, green, or whitepaint, and then sponge-paint randomly over the openpaper bags. Tied with inexpensive brown twine, thismakes a rustic and beautiful gift-wrapping idea —plus it’s a fun holiday family activity, too.

Newspaper comics also make bright, fun wrappingpaper.

� Find post-holiday deals. If you like the variety andsparkle of store-bought paper, shop for it after theholidays, when it’s half off or more.

� Limit the number of decorations. A few strategi-cally placed decorations can have a dramatic effect.A seasonal decoration on the front door, a tree inthe living room, a centerpiece on the dining table,and a few fragrant candles around the house can setthe mood just as well as animated Santas dancing inevery window.

� Save on gifts. Set a limit on how much to spend oneach person you’re buying for. Shop early. Shoponline. Purchase gifts on clearance throughout theyear. If you buy gifts for extended family members,agree to a spending limit, buy a single family giftrather than individual gifts, or trade names.

Spend Less on Holiday Decorations and Gifts 251

13_401170-ch05.qxp 7/24/08 1:10 AM Page 251

252 #98

Get Creative with Gift Giving

Giving to others is definitely wonderful, but is goingto the store and paying top dollar for household

clutter really the answer? Probably not. Here are somegift ideas to help you think creatively:

� A personalized calendar: Creating a personalizedcalendar can be as simple as buying a store-boughtcalendar and writing important family days toremember throughout the year, such as birthdays,anniversaries, and so on. Or buy a blank calendar atthe rubber stamp store and decorate the entire calen-dar yourself. Add the important family dates to thecalendar, and then when the year’s over, the recipientcan cut off the calendar section and keep the scrap-book pages together as a memory book. Instead ofphotos or artwork at the top of each calendar page,how about using a simple layout design with favoritefamily recipes, quotations, and so forth?

� Favorite family recipes: Many families pass downfavorite recipes almost like treasured family heir-looms. Request that family members send you acouple of their favorite recipes and maybe even a sen-tence or two about each recipe, its history or origin,any traditions surrounding the recipe, or even funnyfamily stories. Then put together your own cookbookor have the booklets professionally copied andbound (which is still relatively inexpensive).

13_401170-ch05.qxp 7/24/08 1:10 AM Page 252

� Coffee mug or tea cup with a tasty treat: Include aselection of small bags of coffee mix or favorite coffeebeans, spiced cider mix, a selection of gourmet teas,a pretty silver-plated spoon found at a thrift store, orother favorite tea time or coffee break treats. Wrap itall in cellophane and tie with a pretty ribbon.

� A box of loving memories: Save small souvenirs(theater tickets, seashells, matchbooks with restau-rant logos, and so on) from previous dates or activi-ties you shared with your loved one. Put them into aspecial gift box on an anniversary or a “justbecause” day. For the friend or relative far fromhome, this can make an especially meaningful gift.

� Cotton scraps for your favorite seamstress: Smallpieces of colorful fabric can be used in a variety of cre-ative ways, so if you have a sewing or quilting fanaticin your circle of friends, keep your eyes open whileyou’re at garage sales for cotton shirts, sheets, andpillowcases in nice patterns or plain colors. Pickscraps in colors that blend well together. Cut out largesquares of useable material from the backs and frontsof the shirts, fold the material into neat squares, andthen tie a ribbon around the stack of colorful scraps.

� A dress-up bin: Stock up on inexpensive dress-upclothes and accessories: prom dresses, hats, shawls,scarves, cowboy paraphernalia, costumes, surgicalattire, costume jewelry, men’s suit jackets, clip-onties, and fancy shoes. (Go through your own closetsor get them at garage sales and thrift stores.) Oldlace tablecloths and curtains make perfect weddingveils. Plastic bins with lids work well for storage, buteven just a big cardboard box covered with wrap-ping paper can work for this much-appreciated gift.

� A gift basket for the whole family: A large popcornbowl full of microwave popcorn packages, candy,and movie rental gift cards is a great idea.

Get Creative with Gift Giving 253

13_401170-ch05.qxp 7/24/08 1:10 AM Page 253

� Time, donations, and services: Instead of buyingmore items to clutter up family’s and friends’homes, many people give alternative gifts that aremore in keeping with their personal priorities andthe spirit of each season. Some alternative gift ideasinclude making a donation of time, energy, andresources to a charity in your friend’s name and put-ting together a homemade coupon book of personal-ized jobs you’ll do for the recipient: Mow the lawn,give a back rub, take him shopping, and so on.


Great gift-basket ideasGift basket are one-of-a-kind presents that speak louder than words. Beserious. Be silly. Be inventive. But above all, have fun. Here are giftbasket themes to get your creative juices flowing:

� Guys’ Night: Almonds and a DVD of football’s greatest bloopers

� Midnight Icebox Raid: Snacks stashed in an old cookie jar from aflea market or garage sale

� Sunday Brunch: Traditional brunch foods, Bloody Mary mix, and theSunday paper

� Gay Paree: Pâté, a French-translation dictionary, and an Edith Piaff CD

� Right-O: Scones, a teapot, a selection of teas, and a book of Keats’s odes

� Home on the Range: Barbecue sauce, a flameproof barbecue mitt,and a set of steak knives

� Girls’ Night Out: Chocolate truffles, a video of Love Story, and a boxof tissues

13_401170-ch05.qxp 7/24/08 1:10 AM Page 254

255#99

Give and Package Sweets and Treats

Homemade gifts send the message that you care enoughto take the time to make something with your own twohands. Anyone would enjoy homemade gifts from thekitchen any time of year — whether you have a reasonfor giving or not. Give them to celebrate holidays, tomark birthdays and anniversaries, to spread cheer tosomeone who’s not well, or for no reason at all.

Put just as much care into the way you package your giftas you do into making it in the first place. Keep a few con-tainers, bags, or wraps on hand. They’re convenient forspontaneous gift giving, so try to get in the habit of look-ing for these things when you’re shopping. Consider thefollowing a guided tour of places to look. You never knowwhat unusual packaging you may be the first to discover.

� Craft stores: Roam the aisles and you’re sure to dis-cover all sorts of boxes, ribbon, baskets, papers,pipe cleaners, crepe paper, twine, raffia, twisties,and doodads.

� Super discount stores: Check out the toy depart-ment and see what’s available in the way of bucketsand such. The card departments carry cute littleshopping bags. Housewares departments have nap-kins, mugs, and canisters.

13_401170-ch05.qxp 7/24/08 1:10 AM Page 255

� Gourmet food shops: These shops probably havethe traditional food containers, including the fancierdecorative bottles and French canning jars. Theseitems are great if they fit within your budget.

� Party goods stores: Seasonal ideas are usually avail-able in party goods stores. Wrapping paper, ribbon,tissue paper, and colorful napkins are standarditems.

� Flea markets and related places: Flea markets,antique stores, garage sales, and tag sales are greatsources for potential containers and wrappingitems. Beautiful old glass, baskets, advertising con-tainers, linens, bowls, teacups, wine glasses, molds,and crockery are all there for the creating.

� Your own house: Home is where the heart is, andit’s also the starting point for finding recyclables.Reuse unusual glass water bottles (some water com-panies use colored bottles) by adding a cork andsealing it with paraffin. Reuse pretty tins left overfrom commercial cookies. Cut up old greeting cardsand use them for tags or appliqués.

� Fabric and notions stores: Go here if you want towrap your gift in cloth, whether it’s topping a jam jarwith a square of gingham or wrapping the wholepresent in a fabric bundle through the Japanese artof furoshiki.

� Stationery and card stores: They always have theusual wrapping paper, tissue, and cards, but moreand more stores are expanding their lines to carrylittle tote bags and tins.

� Garden centers and florists: Garden shops carry allsorts of containers in varying shapes nowadays,including pots and baskets. Many garden stores alsocarry patio tableware in all shapes, colors, andsizes.


13_401170-ch05.qxp 7/24/08 1:10 AM Page 256

� Hardware stores: Look in the paint department fordisposable cardboard paint buckets. Empty reusablemetal paint buckets are another option. In theplumbing department, buy a short section of PVCpipe to fill with individually wrapped candies orcookies and then wrap it in stiff fabric or paper likea gigantic party popper.

Everything food comes in contact with should be foodsafe. If you’re not sure, wrap the gift in food wrap first.

Give and Package Sweets and Treats 257

Fun food-as-gift factsHere are a few random thoughts to keep in mind about giving food asgifts:

� Keep the recipient’s tastes and preferences in mind, especially ifyou’re including a reusable container. For example, even if you don’treally like contemporary decor, if the recipient does, choose a con-tainer appropriate for her tastes, not yours.

� The container in which you give the gift isn’t always the best con-tainer in which to store the food. Don’t forget to mention this fact tothe recipient.

� Date and label food gifts. Tell the recipient how long a gift will last.If you suspect that anyone has a food allergy or if you want to be onthe safe side, give a list of ingredients. At the very least, identifywhether the gift contains nuts.

� Keep perishable gifts refrigerated until the last minute before giving.Make sure the recipient knows the gift is perishable.

13_401170-ch05.qxp 7/24/08 1:10 AM Page 257

258 #100

Save on Fine Dining

Dinner out in a nice restaurant doesn’t have tobecome a vaguely remembered activity. By follow-

ing some simple suggestions, families and couples canenjoy an occasional dinner out for a small price tag.

� Avoid overpriced drinks. A simple cup of coffee cancost at least $2, and sodas, milk, and juice for thekids are usually more than that. Drinking water canoften cut $10 or more from the cost of a typicalfamily’s meal. To make the water special, ask for alemon or lime wedge.

If the nicer drinks are essential to your dining expe-rience, forego the mixed drinks; they’re usuallymore expensive than a glass of wine or a beer. Also,many nicer restaurants allow you to bring wine.They generally charge an uncorking fee, but that’ssignificantly less expensive than buying your winefrom them.

� Fill up on appetizers or share a meal. Appetizersare generally less expensive, just as yummy, andnice to linger over, and you can buy two or more forthe price you’d spend on a meal. And given portionsizes today, one meal can often easily feed twopeople, so share. Even if you have to pay a small fee,it’s still less expensive.

13_401170-ch05.qxp 7/24/08 1:10 AM Page 258

� Be aware of suggestive sales. Keep in mind whenordering in a restaurant that anything extra or sug-gested by the waiter is going to add to your bill. Ifyou really want ice cream on your slice of pie, fine.But if you’re only saying yes because what the wait-ress suggested suddenly sounds delicious, you’vesuccumbed to suggestive sales. Keep your radaralert when someone starts suggesting additionalthings to eat or drink.

� Choose your dining time wisely. Many restaurantshave reduced-rate menus on certain days or duringparticular hours.

� Keep your eye out for advertisements andcoupons. You can often find these in the weeklyadvertising circulars that come in the mail and thenewspaper. Many places offer half-price appetizers.Or you may find an ad for buy-one-get-one-freedinner specials. Some restaurants even advertisefree meals for kids during certain hours or on partic-ular days of the week. Also, always ask for therestaurant’s special of the day. It’s often $2 to $5cheaper than the rest of the main menu items.

Save on Fine Dining 259

13_401170-ch05.qxp 7/24/08 1:10 AM Page 259

13_401170-ch05.qxp 7/24/08 1:10 AM Page 260

Part VI

Staying Afloat If theBoat Starts to Sink

14_401170-pp06.qxp 7/24/08 1:02 AM Page 261

In this part . . .

In a time when prices keep going up and incomesseem to keep going down, making ends meet

can be more challenging than ever. Let a crisishappen — a major medical problem or a job loss,for example — and the situation just gets worse.If you’re feeling overwhelmed with debt or arefacing the real possibility of losing your home orhaving to declare bankruptcy, this part is for you.It doesn’t offer any quick fixes, but it does giveadvice on how to put your credit back in goodstanding and navigate your way through majorfinancial catastrophes.

14_401170-pp06.qxp 7/24/08 1:02 AM Page 262

263#101

Look for Signs of FinancialTrouble

Although money problems often seem to strike with-out warning, they usually give off some indicators

that you’re headed for trouble. You and your partner (ifyou have one) should remain on the lookout for warningsigns and work together to build a strong financial foun-dation that can protect you from foreclosure. Here aresome red flags:

� An unbalanced budget: You should have at least asmuch money coming in as is flowing out eachmonth. If you have a partner, the two of you shouldagree, upfront, on how much to spend and what tospend it on.

� Unpaid bills: If you’ve missed more than one mort-gage payment, you’re most likely confronting seri-ous financial difficulties — and you’re closer tomajor calamity than you may realize.

When bills arrive, prioritize them and pay them assoon as possible so they don’t stack up.

15_401170-ch06.qxp 7/24/08 1:04 AM Page 263

� Unregulated spending: If you end up surprised byhow quickly your money disappears or frequentlythink you have a bill covered only to discover thatthe money is gone, chances are you’re not keepingtrack of what you’re spending money on. The situa-tion can be exacerbated if you have a partner. Ifyou’re both off spending money on your own petluxuries, problems often arise.

� Spending too much on debt: If more than 20 per-cent of your monthly take-home income goes towardpaying off debt, not including your mortgage or rent,you may be ready for some professional help.

� Inability to make minimum payments: If you canbarely afford to make minimum payments, chancesare you can’t afford to save — and that puts you atrisk for ending up deeper in debt from unexpectedillness, car problems, or temporary unemployment.

� Arguing with your partner about finances: Fightingabout money is going to happen at one time oranother, but ongoing and unresolved arguing relatedto how bills get paid, who’s responsible for risingdebt, and so on is a sign that finances are a source ofstress in your relationship. Money-related disputesare the number-one cause of divorce in the U.S.

� Being refused credit: Something must be seriouslywrong if a creditor isn’t willing to extend credit,even at an extremely high interest rate.

� Writing bad checks: Writing bad checks by mistakemeans you’ve lost control of your checking account.You need to take immediate steps to remedy the situation.

Part VI: Staying Afloat If the Boat Starts to Sink264

15_401170-ch06.qxp 7/24/08 1:04 AM Page 264

� Getting calls from multiple creditors: If you fallbehind on one bill, chances are you can handle ityourself. As the number of creditors calling you forlate payments grows, the problem becomes expo-nentially more complex.

� Addictive behavior: Any addiction can be a prob-lem, including alcohol, drugs, or the Internet.Anything that takes time, energy, and resourcesaway from a paying job and your family (if you’resupporting a family) can cause financial problems.Identify addictions early and nip them in the bud.

Look for Signs of Financial Trouble 265

15_401170-ch06.qxp 7/24/08 1:04 AM Page 265

266 #102

Understand the Cost of Bad Credit

The extra interest you have to pay is only the tip of thebad-credit iceberg. The real cost of bad credit is in

reduced opportunities, family stress, and having to asso-ciate with lenders who see you as a mark. This sectionfills you in on some of the unpleasant consequences ofbad credit.

� Fees: Creditors may add fees, such as late fees, over-limit fees, legal fees, repo fees, penalty fees, defi-ciency payments, and default rates, to your balance.As bad as the fees can be on your credit cards, theycan be even worse on your secured loans. If you fallbehind in your house payment three months, youcan be hit with huge fees to the tune of thousands ofdollars.

� Higher interest rates: The lower your credit score,the higher the interest rate you have to pay; thehigher your score, the lower the interest rate.Making matters worse, the policy of universal defaultsays that if you have an issue with one lender, allyour lenders can hike your rates as well, eventhough you’re still paying the others on time and as

15_401170-ch06.qxp 7/24/08 1:04 AM Page 266

agreed. Some companies even use a deterioratedcredit score as reason to escalate your rates to thepenalty level.

� Less than favorable loan rates: Shopping around forthe best lender becomes even more important whenyour credit score isn’t as attractive as it could be.Lenders may say yes to a loan but at a higher cost.In a time of tight credit, you may not qualify for aloan at all.

� Lost employment opportunities: Increasingly, creditchecks are a standard part of the hiring and eventhe promotion process at companies large and smallthroughout the United States. Businesses reasonthat the way you handle your finances is a reflectionof your behavior in other areas of your life.

� Higher insurance premiums: A strong correlationexists between bad credit and reported insuranceclaims. Insurance companies run a credit checkwhen determining your premium. What this meansis that bad credit costs you a bundle in insurance-premium increases and may result in your insurancebeing denied.

Understand the Cost of Bad Credit 267

15_401170-ch06.qxp 7/24/08 1:04 AM Page 267

268 #103

Get Copies of Your CreditReport and Scores

Three main sources of credit information dominate thecredit industry today: Equifax, Experian, and

TransUnion. These credit bureaus are basically hugedatabases of information from lenders, bill collectors,courts, public utilities, and others who provide goodsand services to you today and get paid down the road.Credit-reporting bureaus don’t put data in your file; theysimply maintain the files that others put the data into.

A credit score is an additional component used in mostcredit reviews. When lenders order your credit report,they also order your credit score. A credit score summa-rizes your risk of default in a three-digit score that rangesfrom 300 to 850.

Get Your Credit ReportCheck each of your credit reports at least annually. Theinformation changes fairly frequently, and the differentreports contain slightly different information.Fortunately, every American is entitled to one free creditreport from each of the three bureaus per year. To getyour reports, phone, write, or go to the Web site of eachcredit bureau:

15_401170-ch06.qxp 7/24/08 1:04 AM Page 268

� Equifax: P.O. Box 740241, Atlanta, GA 30374; phone800-685-1111; Web site www.equifax.com

� Experian: P.O. Box 2104, Allen, TX 75013-2104;phone 888-397-3742; Web site www.experian.com

� TransUnion: 2 Baldwin Place, P.O. Box 1000, Chester, PA 19022; phone 800-888-4213; Web sitewww.transunion.com

Alternatively, you can go to a central source to get allthree reports:

Annual Credit Report Request ServiceP.O. Box 105281Atlanta, GA 30348-5281Phone 877-322-8228Web site www.annualcreditreport.com

Get Your Credit ScoreYou have to request and pay for a copy of your creditscore. Not just any credit score will do. You want yourFICO score, which is the credit score lenders use. You canget your FICO credit score from only two places:

� myFICO: Phone 800-319-4433; Web sitewww.myfico.com

� Equifax: P.O. Box 740241, Atlanta, GA 30374; phone800-685-1111; Web site www.equifax.com

The other credit-reporting bureaus — Experian andTransUnion — offer credit scores but not the FICO creditscore. If you want your FICO score in addition to anExperian or TransUnion credit report, you need to pay fora report and score package from myFICO.

Get Copies of Your Credit Report and Scores 269

15_401170-ch06.qxp 7/24/08 1:04 AM Page 269

270 #104

Check Your Credit Report

When you have your credit report (see Tip #103,“Get Copies of Your Credit Report and Scores”),

you’re poised to take the necessary steps to clean up theinformation that’s there — removing outdated or inaccu-rate details, adding positive information, and evenincreasing your credit score. By doing all this, you canput yourself in a better position to receive credit andearn the most attractive interest rates when you doborrow. Here’s what you should look for in particular:

� Make sure your name is spelled correctly and yourSocial Security number is correct. With all the datamoving through the financial reporting system, a Jr.or a Sr. can easily drop out or confusion over a II orIII designation can occur.

� Check to see which of your accounts show up onyour credit report. Remember that your creditreport may not show all your accounts, becausecreditors are only required to supply information toone of the three major credit bureaus.

� Look to see whether accounts are showing theactivity they ought to. If you see accounts that arefamiliar but activity that isn’t — such as a late-payment notation when you’re certain you’ve neverbeen late — report that error to the credit bureau.

15_401170-ch06.qxp 7/24/08 1:04 AM Page 270

Also, if you see accounts you don’t recognize, it maybe a simple mix-up or something more serious, likeidentity theft. Again, call the bureau and find out.

� Look for accounts from a bank or store with whichyou’ve never done business. This info may havebeen added to your credit report because of a mis-spelled name or incorrect Social Security number.

� Identify which accounts are showing negativeactivity. Negative activity can include things likemissed or late payments.

� Look for any overdraft protection lines of credit.These lines of credit often outlive the accountthey’re protecting. Closing these lines of credit canbe helpful if you have a lot of credit available.

� Check out all the addresses the reports list foryou. Incorrect addresses can lead to incorrect information.

Check Your Credit Report 271

15_401170-ch06.qxp 7/24/08 1:04 AM Page 271

272 #105

Dispute Inaccurate Info onYour Credit Report

You can’t legally remove accurate and timely informa-tion from your credit report — whether it’s good or

bad. But the law does allow you to request an investiga-tion of any information in your file that you believe is outof date, inaccurate, or incomplete. You won’t be chargedfor this investigation, and you can do it yourself at littleor no cost.

Credit bureaus have made the process for disputing andcorrecting inaccurate information as easy as possible.Your role is to check your reports at least once a yearand, if you see information that looks unfamiliar orwrong, file a dispute.

Any financial institution that submits negative informa-tion about you to a national credit-reporting agency hasto tell you so. This gives you a heads-up to jump onerrors earlier than you could under the old laws.

Each of the three credit bureaus has slightly different pro-cedures for consumers to file disputes, but all three allowyou to dispute by phone, online, or by mail:

15_401170-ch06.qxp 7/24/08 1:04 AM Page 272

� Equifax: Call 800-685-1111, and be sure to have your10-digit credit-report confirmation number (on yourreport) available. You can also dispute by mail atEquifax Information Services LLC, P.O. Box 740256,Atlanta, GA 30374 (no confirmation number isrequired on written correspondence) or online atwww.equifax.com.

� Experian: You can dispute by phone at 888-397-3742;online at www.experian.com; or by mail at P.O. Box2104, Allen, TX 75013-2104.

� TransUnion: You can dispute any information byphone at 800-916-8800; online at www.transunion.com; or by mail at TransUnion Consumer Solutions,P.O. Box 2000, Chester, PA 19022-2000 (be sure toinclude your TransUnion file number, available onyour TransUnion credit report).

Here’s what happens when you dispute information: Afterthe bureau receives a dispute, it contacts the source thatprovided the data. That source has 30 days in which torespond. If the source can’t verify the data within thetime allowed, the information must be removed fromyour report. If, on the other hand, the information is veri-fied, it stays on your report. In either case, you’re notifiedin writing of any actions that occur as a result of your dis-pute. If you disagree with the findings, you can ask howthe investigation was conducted and who was contacted,as well as add a statement to your report saying why youdisagree.

Under the Fair Credit Reporting Act (FCRA), both thecredit bureau and the organization that provided theinformation to the credit bureau — such as a bank orcredit-card company — have responsibilities for correct-ing inaccurate or incomplete information in your creditreport.

Dispute Inaccurate Info on Your Credit Report 273

15_401170-ch06.qxp 7/24/08 1:04 AM Page 273

If you’re unhappy with the results of your dispute andthink you’ve been treated unfairly or haven’t been takenseriously, contact the Federal Trade Commission (FTC).The FTC works to prevent fraudulent, deceptive, andunfair business practices in the marketplace and to pro-vide information to help consumers spot, stop, and avoidthem. To file a complaint or to get free information onconsumer issues, visit www.ftc.gov or call 877-382-4357(TTY 866-653-4261).


Be assertiveBeing assertive means not giving up until you resolve an issue. It meansasking pointed, relevant questions and then asking follow-up questionsuntil you’re sure you understand what’s going on or the issue has beenresolved. It means that you follow up on everything and you push theenvelope of your comfort level, and the comfort level of the people withwhom you’re dealing. If your lender’s representative tells you that she’llget back with you in a couple days and she doesn’t, call her back andpolitely say that you haven’t heard anything and wanted to follow up.Explain to her that you want to get this matter worked out and behindyou, and you don’t want to miss any deadlines or cutoff dates.

15_401170-ch06.qxp 7/24/08 1:04 AM Page 274

275#106

Add Positive Info to YourCredit Report

The best way to get positive information inserted intoyour credit report is to make payments to your credi-

tors on time and in the full amount each month. Do so fora year or more, and you’ll have made great strides inimproving your credit history and your credit score. Youcan also add some information to your credit report.Consider doing the following:

� Requesting that your good accounts be added toyour report if they aren’t already showing up

� Adding a 100-word statement to explain certaininformation, such as late payments

� Opening new types of credit accounts, such as aninstallment account if you have only credit cards

Be careful when using this tactic to improve yourcredit score. You can do more harm than good. Ifyou open an account with a large amount of avail-able credit, it’s likely to push your available creditover the limit of what’s acceptable by lenders.

15_401170-ch06.qxp 7/24/08 1:04 AM Page 275

276 #107

Bring Credit Card Debt Under Control

The first thing to do when you need to get your creditcard debt under control is to look over each of your

credit-card statements each month. You may be sur-prised to find charges on your account that aren’t yours,or you may not have realized just how much you’recharging each month. If you see anything you’re unsureabout or that’s incorrect on any part of your credit-cardstatement, call the credit-card company immediately andresolve the issue. The following sections outline otherways to regain control over your use of credit cards.

Stop SolicitationsBy limiting or eliminating credit-card and loan offers,you’ll be less apt to apply for this “easy” credit. One wayto minimize the number of solicitations you receive fromwould-be lenders is to get your name added to no-call orno-solicitation lists. Eliminating these solicitations alsoreduces the number of opportunities identity thieveshave to establish credit in your name — and saves a fewtrees.

15_401170-ch06.qxp 7/24/08 1:04 AM Page 276

� Call 888-5OP-TOUT (888-567-8688) to have yourname removed from the marketing lists that are soldby credit bureaus to potential lenders.

� Write the Direct Marketing Association to beremoved from its direct mail and phone lists. Besure to write a letter to each of the following:

• Mail Preference Service, P.O. Box 643, Carmel,NY 10512

• Telephone Preference Service, P.O. Box 1559,Carmel, NY 10512

� Contact the Direct Marketing Association online andrequest that your information be removed from itsmail, telephone, and e-mail marketing databases:

Mailing lists: www.dmachoice.org/MPS/proto1.php

Phone lists: www.the-dma.org/cgi/offtelephonedave

E-mail lists: www.dmachoice.org/EMPS

� Register for the National Do Not Call list atwww.donotcall.gov or by calling 888-382-1222.

Registering your name with no-call or no-solicit lists doesn’t in any way affect your ability to borrow money.

Cut the CardsIdentifying the problem is the first step to digging out ofdebt. The second step is often difficult for hard-corecredit card junkies: cut up your credit cards. Yep, pull outthe scissors and start snipping.

Bring Credit Card Debt Under Control 277

15_401170-ch06.qxp 7/24/08 1:04 AM Page 277

Some credit providers can’t officially close the accountuntil you pay in full, but do not, under any circumstances,use a credit card until you pay your debts in full. If you’redeeply in debt, paying it off can take several years. Butafter you’re out from under the burden of excessive debt,the relief you experience more than makes up for theinconvenience of going without credit for a long stretchof time.

Sometimes you need a credit card of some sort formaking airline reservations, buying online, or renting acar. If so, get a check card from your bank.


15_401170-ch06.qxp 7/24/08 1:04 AM Page 278

279#108

Take Credit Solutions intoYour Own Hands

By being proactive and acting quickly, you can solvesome credit problems on your own. Other prob-

lems, because of their magnitude or what you risk losing,require the help of a competent credit counselor (see Tip#109, “Seek Help for Credit Problems” for details on thelatter).

The credit situations outlined here are ones that you canprobably resolve without much help. If you go it alone, besure that you identify the cause of the problem andresolve it, know how much money you have to work with,and act quickly.

Missing a Month’s Payment on a Credit Card

If you can’t make this month’s payment or if you’vemissed a month’s payment already on your credit card,be proactive. As long as you know what you can afford,and you don’t mind explaining your situation overthe phone, you can get quick results. Call the toll-freecustomer-service number and tell the rep who you are,

15_401170-ch06.qxp 7/24/08 1:04 AM Page 279

what happened, and how you want to handle it. If youneed a break from having to make payments, say so. Ifyou can make up the missed payments over the nextmonth or two, make an offer (just make sure your offeris something you can make good on).

Usually, if you’re proactive and contact credit-card compa-nies before they contact you, you establish yourself as agood customer who needs and deserves special considera-tion — much better than an elusive customer who’s behindin payments, doesn’t call, and may be a collection risk.

You may be asked to do more than you think you can. Donot agree to anything you don’t think you can deliver.Saying that something isn’t possible, and explaining why,is much better than caving in but not being able to followthrough. Ask to talk to a supervisor — he or she hasmore authority to bend the rules.

Missing a Mortgage Payment or Paying Late

If you’re within the grace period allowed in your loan doc-uments, just send the money in if it will make up theshortfall. If you’re past the grace period, you have vary-ing amounts of time to make up the deficit, depending onthe state you live in. Suppose you’re behind on yourmonthly payment of $1,000. If you can send only $500extra with the next month’s $1,000 payment, you’ll still beshort $500, right? Wrong. You may be behind the full$2,000 if the bank doesn’t accept either payment becauseyou didn’t catch up in full. If you aren’t far behind andyou can catch up in one shot, do it. Otherwise, get helpfrom a credit-counseling agency.


15_401170-ch06.qxp 7/24/08 1:04 AM Page 280

Deferring Student LoansGetting a short-term waiver on student loan paymentsisn’t difficult if you have a good reason. Unemployment, alow-paying job, illness, a return to school — each of thesereasons may qualify you for a short-term waiver, but onlyif you give the lender a call before you get into a defaultsituation. The student-loan people are usually very forgiv-ing as long as they think you’re playing it straight withthem.

Take Credit Solutions into Your Own Hands 281

15_401170-ch06.qxp 7/24/08 1:04 AM Page 281

282 #109

Seek Help for These Credit Problems

Certain situations create more financial stress thanothers. Credit counseling can help with the three

main categories of problems that can wreak the mosthavoc:

� Multiple bill collectors: Most people can handle one or two collectors. But when you get to five, ten,or even more, you’re pulled in many directions atonce by their conflicting demands. It takes only one unreasonable creditor to make your situationimpossible.

� Joint credit problems: Credit problems are exacer-bated when you share them with someone whodoesn’t see things the way you do. Compromising ishard enough in good times; in stressful situations,finding solutions agreeable to everyone can bemuch more difficult.

� Debts that are backed by assets: If you take out aloan to buy a car, your loan is secured by that car. Ifyou take out a loan to buy a house, your loan issecured by the house. In other words, security iswhat you stand to lose if you don’t or can’t pay backthe money you borrowed. As a general rule, the

15_401170-ch06.qxp 7/24/08 1:04 AM Page 282

more security lenders have, the less willing they areto work with you to solve what’s clearly “your prob-lem.” It’s easier than most people think to lose theseassets if you’re not making payments. If you can’tcome up with the entire deficit quickly, get helpbefore things snowball.

Seek Help for These Credit Problems 283

15_401170-ch06.qxp 7/24/08 1:04 AM Page 283

284 #110

Work with a CreditCounseling Agency

A credit-counseling agency serves as an objectiveparty to help you sort through your problems, see

your situation through the eyes of professional, give yousome credit education, offer personalized budgetingadvice, and design a customized plan to get you out ofdebt — all for nothing or next to nothing.

A credit-counseling agency analyzes your sources ofincome and your expenses. The agency will

� Detail what you owe.

� Give you an organized picture of your financial situation.

� Provide options that match your resources, lifestyle,and goals.

� Tell you the steps you need to take to reach thosegoals.

Whether you first contact a credit-counseling agency byphone, e-mail, or in person, the counselor asks you whyyou’re there, what you want to accomplish at the meet-ing, and what your short-term and long-term goals are.

15_401170-ch06.qxp 7/24/08 1:04 AM Page 284

Then some fairly detailed data-gathering takes place.You’re asked about your income sources and tax deduc-tions, as well as your monthly expenses. Having a goodidea about what your monthly expenses are helps, but itisn’t a requirement — if you don’t know, the credit coun-selor can help you estimate them. A quick subtraction ofexpenses from income tells you how much you haveavailable for monthly debt service, if any. The counselorwill suggest ways to adjust your expenses or income, toget you to a positive cash-flow position (in which moremoney is coming into your household than is going out).

Next, you and the counselor go over all the debts youhave to pay. The positive cash flow from the earlier calcu-lation is applied to the amount you have to pay. If any-thing is left over, you’re basically done — you leave withan action plan and a budget you can follow to keep yourexpenses in line with your income. If the result is negative(you have more expenses than you have income), youand your counselor rework the expenses to free up cashflow and he or she tells you what your debt servicewould be under a debt-management plan.

This process of reducing your expenses and increasingyour income continues until you and the counselor get toa positive cash flow or it becomes apparent that, nomatter what you do, the numbers just don’t work in yourfavor. If you can’t get to a positive cash flow, the coun-selor refers you to an attorney or other communityresources for additional help.

Alas, there is no magic wand to make all your financialproblems disappear, but a good certified credit counseloralways offers solutions. Expect more than one solution,and expect some solutions you don’t like. Your counselorwill give you a balanced perspective of what you need todo, how long it will take, and what resources are available

Work with a Credit Counseling Agency 285

15_401170-ch06.qxp 7/24/08 1:04 AM Page 285

to help you along the way. Your counselor will probablydiscuss bankruptcy, as well as other solutions. The key:The counselor proposes solutions not just in the light ofyour current situation, but also in light of your futureneeds.

Beware of services that overcharge and underserve thecredit-impaired, offering a product based on technologyrather than public-service, mission-oriented values. Ifyou’re already up to your eyeballs in debt, avoid thesedebt mills like the plague! You need the maximum helpfor the minimum cost and you won’t find it with them.


15_401170-ch06.qxp 7/24/08 1:04 AM Page 286

287#111

Create a Debt-Management Plan

If you’re in debt crisis or you’re concerned you may begetting close to it, a debt-management plan from a

good credit-counseling agency may be just the solution.For a small monthly fee the agency handles both commu-nications and payments on your behalf, and it includesrevised payments that:

� Are acceptable to all your creditors

� Leave you enough money to handle your livingexpenses

� Generally get you out of debt in two to five years

When creditors realize that you can’t meet the originalterms of your credit cards or other loan agreements, theyalso realize that they’re better off working with youthrough your credit counselor. Under a debt-managementplan, your creditors are likely to be open to a number ofsolutions that are to your advantage. These solutionsinclude:

� Stretching out your payments so that the combina-tion of principal (the amount you originally bor-rowed) and interest will pay off your balance in 60months or less

15_401170-ch06.qxp 7/24/08 1:04 AM Page 287

� Changing your monthly payments to an amount youcan afford to pay

� Reducing your interest rate and/or any fees associ-ated with your loan

� Stopping creditors from hounding you day and night

Sounds like a good deal: lower interest rates, smaller pay-ments, and all. Well, the debt-management plan isn’t afree lunch. The minuses may include the following:

� A possible negative impact on your credit report(although just being in a debt-management plandoesn’t affect your FICO score)

� An increase in interest rates (unless you pay in fulland through the credit-counseling agency you origi-nally signed up with)

� Restricted access to credit during the term of theplan

� Difficulty in changing credit-counseling agenciesafter you begin a debt-management plan


15_401170-ch06.qxp 7/24/08 1:04 AM Page 288

289#112

Talk to Creditors to Work Out a Solution

For many people, communication isn’t easy. Compoundthis apparently widespread communication disability

with emotion, guilt, and maybe even some anger, and youhave a recipe for conflict and communication breakdown.Yet this is the very situation that thousands of peoplefind themselves in when they’re trying to put a stop totheir credit crises. People just like you pick up the phone,call their creditors, and find themselves in a yellingmatch with a representative who seems to have the sensi-tivity of a robot.

Is resolution possible here? Yes — if you do your home-work, offer a solution, follow through with what youpromise, and follow these steps:

1. Contact your creditor promptly.

2. Explain your situation.

Here are some elements you want to communi-cate (using a phone conversation as an example):

• Begin the conversation on a positive note.

• Get the person’s name.

15_401170-ch06.qxp 7/24/08 1:04 AM Page 289

• Briefly (in a couple minutes or so) explainyour circumstances.

• Stick to the facts.

3. Offer a solution.

Whatever your proposed plan, be sure to coverthese bases:

• Offer an estimate of how long you realisti-cally need to rectify the situation.

• Propose a specific payment figure and planthat you can manage.

4. Cover all the bases.

After you agree to terms, ask the creditor to mailor e-mail a letter with the new agreement to you;after all, you want to avoid any misunderstand-ing. If this letter doesn’t seem to be forthcomingfrom your contact, or if you don’t receive writtendocumentation of the new terms in a few days,follow up with the creditor in writing.


15_401170-ch06.qxp 7/24/08 1:04 AM Page 290

291#113

Negotiate a PaybackArrangement with Collectors

Suppose you get a call or a letter claiming you have apast-due financial obligation. Even if you’re sure you

owe the money, asking for details — which account, whatthe bill was for, the age of the debt, when the statementwas mailed to you — never hurts. Why? For two good reasons:

� The collector may be wrong.

� You may be the victim of a scam.

When you and the collector are in agreement that all theparticulars of the debt are legitimate, it’s time for you tomake an offer to resolve the obligation — whether thecause of the delinquency was an unintended error orunfortunate circumstance.

You want to convey your concern and reassure the col-lector that you’re sincere in your commitment. But thatdoesn’t mean you shouldn’t negotiate for an arrangementthat favors you. As you’re discussing the repaymentterms, think of some concessions you want to have. Forexample, you may want the creditor to

15_401170-ch06.qxp 7/24/08 1:04 AM Page 291

� Keep it from the credit bureaus

� Waive late fees

� Give you a lower interest rate

If you’re 90 days or more past due, you’re on thinner icebecause you’re more seriously late and three months offees will probably be in the $100 vicinity. You may just askfor bureau-reporting forgiveness (that costs the creditornothing). If, on the other hand, your situation is such thatyou can’t pay back the money right now, you may nothave a leg to stand on when it comes to asking for favors.You may just have to set your sights on a reasonablerepayment plan that you can live with.

If you’re under extreme financial duress, go a step furtherand ask whether the creditor has a hardship program.You may have to meet some qualifications, but if you do,you could see your interest rate drop dramatically, per-haps even to zero, and have your payments lowered forsix months to a year.


15_401170-ch06.qxp 7/24/08 1:04 AM Page 292

293#114

Avoid Credit-Repair Scams

Credit-repair companies can’t do anything legitimatethat you can’t do for yourself. Some are shady, some

aren’t, but you have to be on the lookout for scams. Runfor cover whenever a credit-repair company

� Tries to loan you money

� Plans to sell your name to other lenders

� Boasts that it can remove truthful information fromyour credit reports

Sometimes advisors suggest that you apply for credit byusing a Social Security number similar to but slightly dif-ferent from your real number, hoping that instead ofmatching this fake number with an existing file, the creditbureau will create a new one. Taking this step is both ille-gal and stupid.

15_401170-ch06.qxp 7/24/08 1:04 AM Page 293

294 #115

Keep Credit Under ControlWhile Unemployed

Your credit-report experience tends to follow yourpersonal financial experience, so you can do a few

things to protect your credit while you’re unemployed.

Use Credit during UnemploymentWhen you find yourself unemployed, if you’ve estab-lished savings (regardless of the amount) and you havesome available credit lines, you have two tools that willhelp you get through this time without damaging yourcredit. By using a combination of credit and cash, youcan put together a new plan that includes finding thatnew job and implementing a budget that works while youdo so.

Stay away from cash advances! Spending money this waycosts more than using a credit card. Using your creditcard to buy a $10 item may seem silly, but it’s better foryou than using a $10 cash advance. Cash advances comewith an extra fee, often have a higher interest rate, andoften have a maximum lower than your credit limit.

15_401170-ch06.qxp 7/24/08 1:04 AM Page 294

Look at credit differentlyWhen you’re unemployed, use credit for basic living andjob-hunting expenses, preserving your cash for as long aspossible by using credit first. This advice is just about theopposite of what most people tell you. But when you usecredit for these expenses, you do so for a limited periodof time and for a specific, worthy purpose. Think of it asborrowing money for a surefire investment: your future.Keep your overall spending to essentials by closely fol-lowing a budget (see the next section).

Refigure the family budgetTo keep your spending in line with your reducedresources, discuss the situation and the need to tem-porarily reduce expenses with your family. Don’t beembarrassed in front of the kids. This situation is animportant lesson in reality, and you can show them howadults face difficult issues and win.

If your severance is being paid out over time or if youhaven’t yet received it, ask your employer or humanresources department to raise your deductions to themaximum allowed: ten. (Don’t ask for more than ten,because the IRS wants a report of anyone with more thanten deductions.) This strategy results in more cash now,when you need it.

Yes, you may owe some taxes on this money in April(though your job-hunting expenses and reduced earningsfor the year may offset that). You want to maximizetoday’s income at the possible expense of tomorrow’sdemands.

Keep Credit Under Control While Unemployed 295

15_401170-ch06.qxp 7/24/08 1:04 AM Page 295

Protect Your Credit LinesThe downside to using credit for basic living expenses (asound strategy during unemployment) is that you may dosome damage to your credit. Here are some tips for pro-tecting your status while leveraging your available creditto get through this challenging time:

� Keep balances at less than 50 percent of youravailable credit. Spread your credit use over sev-eral accounts to keep your balance on each card atless than 50 percent. Rather than having, say, a$2,000 balance on one card and a $0 balance onthree cards, spread the amount over four cards —with each balance at $500.

� Make all payments on time. Thirty-five percent ofyour credit score has to do with whether you makepayments on time.

� Pay your mortgage first. Not all bills are createdequal — and your mortgage is the most unequal ofthem all. If you can afford to pay only one bill, paythis one. Partial payments don’t work, and fallingbehind 90 days begins a difficult-to-stop foreclosureprocess.


15_401170-ch06.qxp 7/24/08 1:04 AM Page 296

297#116

Use Home Equity toConsolidate Debts

If you have credit card debt, a second mortgage, orother loans in addition to your first mortgage, debt

consolidation can take a chunk out of your monthlyexpenses, freeing up money to cover other bills.

Discover Debt-ConsolidationOptions

Consider exploring the following options for consolidat-ing debt:

� Refinance your mortgage.

� Take out a home equity loan.

� Take out a home equity line of credit.

When you’re already having trouble paying your bills,you may have damaged credit, which makes obtainingthe loan you need to consolidate your debt that muchmore difficult. If that’s the case, look at other means ofconsolidating, like getting one of these types of loans:

15_401170-ch06.qxp 7/24/08 1:04 AM Page 297

� An unsecured loan allows you to pay off the old debtand make one monthly payment to the bank.

� A secured loan requires that you put up some formof collateral so the bank has something it can takefrom you and sell to cover the debt.

Which is best — a secured or unsecured loan? Thatdepends on your situation. Discuss your options with aqualified loan officer or mortgage broker in your area.

When you borrow money, read and fully understand thedocuments before signing them. Know what the provi-sions are, when payments are due, what happens to sur-plus funds if collateral is sold for more than is required topay off the loan, and so on. Have an attorney review thedocument and advise you of any potential issues beforeyou sign.

Compare the Costs of LoansConsolidating debt with a loan you pay too much for isn’ta smart move when your goal is to lower payments andreduce what you owe. You can select from hundreds ofloan types, but the bottom line is how much the loancosts in the long run. The best way to compare loans is todetermine the total cost of each loan over the life of theloan:

1. Add up the fees charged to process the loan,including the loan origination fee, points, andclosing costs.

2. Multiply the monthly payment by the numberof months it will take you to pay off the loan infull.


15_401170-ch06.qxp 7/24/08 1:04 AM Page 298

3. Add the amounts from Steps 1 and 2 to deter-mine the total cost of the loan.

4. Subtract the total amount you expect to paytoward principal over the life of the loan.

Ask the bank for an amortization worksheet foreach loan to see how much principal you’ll havepaid at the time you expect to sell the house andpay off the loan.

The result is the total cost of the loan. Simply choose theloan that costs the least over the life of the loan.

Use Home Equity to Consolidate Debts 299

15_401170-ch06.qxp 7/24/08 1:04 AM Page 299

300 #117

Take Control WhenForeclosure Looms

As soon as you begin to sense that your financial situ-ation has taken a turn for the worse, you and the

rest of your household need to work together to keep theproblem from getting worse. Picture yourself in a boatthat’s taking on water. Before you start bailing out thewater, find the holes and plug them.

Freeze Your FinancesWhen foreclosure strikes, the first order of business is toget a handle on your finances. Do whatever possible tokeep more cash flowing in than flowing out — boostincome with overtime or a second job, slash unnecessaryexpenses, and sock away as much money as possible. Ifyou have children, trimming the fat is more stressful,because you may fall into the trap of thinking you’redepriving your children or letting them down. Keep inmind that the one thing your kids want and need most isyou, not the stuff you buy them. These ideas can get youstarted:

15_401170-ch06.qxp 7/24/08 1:04 AM Page 300

� Instead of ordering Chinese and renting videos, cooka meal and have a family game night.

� Put off that trip to the salon for a manicure, pedi-cure, facial, or hair appointment. Do it yourself.

� Scale back on this year’s vacation; take day tripsand pack a picnic lunch.

� Instead of treating your friends and family to dinner,invite them over for a pitch-in.

What you do with added income and savings depends onyour strategy. If you’re committed to saving your home,set aside the extra cash for reinstating the mortgage orworking out a payment plan with the bank. If saving yourhome is a lost cause, you may decide to squirrel away asmuch money as possible during the redemption periodso that you have a sufficient nest egg to take with youwhen you move.

Prioritize Your BillsPart of the process of stabilizing your current situation isprioritizing your bills. So when you’re facing foreclosure,pay your bills in this order:

� Property taxes

� Secured debts

� Homeowner’s insurance

� Utility and grocery bills

� Unsecured debts

Take Control When Foreclosure Looms 301

15_401170-ch06.qxp 7/24/08 1:04 AM Page 301

Know Who to ContactYour most valuable assets in foreclosure are people whocan assist you, so draw up a list of people you can leanon. Your list may include the following:

� Friends and relatives

� Bank representative

� Real estate agent (Note: Selling the home is oftenthe best option in foreclosure cases.)

� Register of deeds

� Sheriff

� Bankruptcy attorney

� Foreclosure attorney

Gather Important DocumentsBefore you get too far into the foreclosure fight, gatherimportant documents and other materials you’ll be calledupon to deliver at some point in the process. The mostimportant of these legal documents:

� Mortgage, deed of trust (if you purchased yourhome through a bank), or contract for deed (if theseller provided financing

� Modifications to the mortgage or promissory note

� Deed

� Correspondence

� Notice of default


15_401170-ch06.qxp 7/24/08 1:04 AM Page 302

� Sheriff’s or trustee’s deed

� Canceled checks

� Bank statements

� Listing agreement

� Current appraisal

� Phone logs

� Other stuff (Keep anything else you think may berelevant. Having more than you need is better thanneeding something later and not having it.)

If you can’t find a copy of your deed or mortgage or any-thing else that’s part of the public record, schedule a tripto your local county building; you can usually obtaincopies of most documents by paying a small per-pagecopy fee.

Take Control When Foreclosure Looms 303

15_401170-ch06.qxp 7/24/08 1:04 AM Page 303

304 #118

Draft a Plan of Attack toOffset Foreclosure

If you’re facing possible foreclosure, you need a plan.Are you going to try to save your home? Do you want

to sell it to get out from under the burden? Does it makesense to simply live in the home as long as possible andthen bail out before the sheriff comes to evict you?Following are some options:

� Filing for bankruptcy: This is a costly option.Consult with a reputable bankruptcy attorney inyour area before making any final decisions.

� Reinstating your mortgage: If you think you’ll beunable to pay off the loan in addition to making yourmortgage payments, reinstatement may not be theideal solution for you.

� Arranging for a redemption

� Haggling for a forbearance: A forbearance agreementis similar to reinstating, but you don’t have to pay alump sum all at once.

� Negotiating a mortgage modification

15_401170-ch06.qxp 7/24/08 1:04 AM Page 304

� Refinancing your home with another lender: Bewary of shady loan originators who may try to takeadvantage of you by selling you a loan (one with avery high interest rate or an adjustable-rate mort-gage [ARM] with a low teaser rate that’s likely torise suddenly) that’ll put you in worse shapemonths or years down the road.

� Living off your home with a reverse mortgage.

� Selling the house

� Deeding the house to your bank in lieu of foreclo-sure: When offering a deed in lieu of foreclosure,make sure the bank provides you with a formalrelease of all obligations for repaying the debt.Otherwise, the bank may be able to file for a defi-ciency judgment if the house sells for less than whatyou owe on it; you’re then responsible for payingthe difference.

� Selling the house to an investor

� Moving out and leaving the keys

When you serve your country in the military, you’re eligi-ble for a few well-deserved perks, including mortgagepayment relief and foreclosure protection. TheServicemembers Civil Relief Act (SCRA) of 2003 (formerlythe Soldiers’ and Sailors’ Civil Relief Act of 1940) providesthis protection for eligible service members. For moreinformation, go to www.hud.gov/offices/hsg/sfh/nsc/qasscra1.cfm.

In deciding how to proceed, weigh your options rationally:

1. Lay all options on the table, no matter howunrealistic they may seem right now.

Draft a Plan of Attack to Offset Foreclosure 305

15_401170-ch06.qxp 7/24/08 1:04 AM Page 305

2. Arrange the options in order, from the onesthat sound most attractive to the ones thatsound least attractive.

3. Move to the bottom any options that are likelyto land you back in the same place you are now(or worse).

4. Get on the same page as your spouse or partner.

The execution of your plan will be most effectiveif you present a unified front. You both need toget with the program, agree not to fight (toomuch), and join forces to develop a solid planand put it into action.

In a slow market, the lender may be more amenable toworking with you. After all, the bank stands to lose ifnobody in the area can afford its mortgage payments. Ifthe lender is smart, it’ll try to work out a solution thatenables you to stay in your home and eventually startmaking payments again.


15_401170-ch06.qxp 7/24/08 1:04 AM Page 306

307#119

Understand Types of Bankruptcy

If you’re filing for bankruptcy, your basic choice isbetween a bankruptcy that doesn’t involve any type of

repayment plan (Chapter 7 bankruptcy) and one thatdoes (Chapter 13). Base your decision on what’s best foryou and your family, not on what you think will makeyour creditors happy.

Chapter 7: Straight BankruptcyChapter 7, or straight bankruptcy, is the belly-up versionthat most people envision when they hear the word bank-ruptcy. If you file under Chapter 7, most of your debts areeliminated, and some of your property may go to yourcreditors. You don’t have any repayment plan; your debtssimply disappear.

Assets that are nonexempt (or ripe for picking by credi-tors) may be seized and sold by the trustee, with the pro-ceeds distributed to your creditors. In the real world,however, most consumer bankruptcies are no-asset cases.In other words, you have nothing for creditors to take,except the shirt on your back and other items that areoff-limits. If things work out, you lose only your debt.

15_401170-ch06.qxp 7/24/08 1:04 AM Page 307

To qualify for Chapter 7 bankruptcy, you need to jumpthese hurdles:

� Can you pass the Means Test? The Means Testrequires a complicated set of calculations that aresupposed to identify those consumers who can paya significant portion of their bills and should berequired to do so instead of shedding all their obli-gations in Chapter 7.

� Are you acting in good faith? Some judges considerwhether you’re acting in good faith. They may askwhether

• Your bankruptcy was necessitated by suddenillness, calamity, or unemployment.

• You made unnecessary eve-of-bankruptcy pur-chases far exceeding your ability to pay.

• Your bankruptcy paperwork is complete andaccurate.

Chapter 13: Debt Repayment Plans

In filing a Chapter 13 bankruptcy, you propose a debtrepayment schedule, and, for the next 36 to 60 months,you pay what you can afford. The two types of paymentsthat you may have to make are

� To a trustee, who doles out money to creditors.

� So-called payments outside the plan, which are pay-ments that come due after you file and are paiddirectly to the creditor.


15_401170-ch06.qxp 7/24/08 1:04 AM Page 308

Creditors usually receive only a small percentage of whatthey’re owed and typically must settle for pennies on thedollar. After that, you’re home-free. Even if you can’t elim-inate debts, you can still use Chapter 13 to keep creditorsoff your back while you pay them in full over three to fiveyears.

Only individuals with regular income (no corporations,no partnerships) can file under Chapter 13. The source ofyour income isn’t important, provided it’s regular andstable. Your income can be wages, self-employment prof-its, unemployment benefits, or even assistance fromfriends and family.

Understand Types of Bankruptcy 309

15_401170-ch06.qxp 7/24/08 1:04 AM Page 309

310 #120

Try to Avoid Bankruptcy

You don’t need to file bankruptcy to solve a trivialfinancial problem or when a more targeted remedy

is available. Although you shouldn’t view bankruptcy as alast-ditch solution, you probably shouldn’t make it yourfirst consideration either. If you can get out of troublewithout filing, that’s wonderful! In fact, you may want toconsider the following solutions before deciding thatbankruptcy is the way out. If these tips don’t do the trick,try the tactics in Tip #121, “Negotiate with Creditors toAvoid Bankruptcy.”

BudgetIf you can get your financial house in order through disci-pline and careful budgeting, go for it. The key to realisticbudgeting is establishing a reasonable time frame forimmediate and long-term goals and adopting a positiveattitude that focuses not on what you’re giving up butrather on what you’re achieving.

15_401170-ch06.qxp 7/24/08 1:04 AM Page 310

Allow Your Family to Bail You Out

If a parent or other family member offers to save yourhide, accepting that generosity is tempting. Allowing yourfamily to bail you out may be a wise alternative to bank-ruptcy, but only if your Guardian Angel

� Is ready, willing, and able to help.

� Can pay your debts without suffering financial hard-ship himself.

� Can truly solve your problem, not just postpone aninevitable bankruptcy.

Sell Your AssetsIf you own assets that you’d lose to a bankruptcy trustee,you may want to consider selling your stuff to pay yourdebts. If that doesn’t raise enough money to pay all yourdebts, it at least helps whittle down your debt load.Consider selling your nonexempt assets — those that acreditor can get — not exempt assets, those that are off-limits to creditors.

Every state has laws that make certain essential assetsexempt or off-limits to creditors, regardless of whetheryou file bankruptcy. Don’t let anyone bully you into sell-ing exempt assets, which in most cases are off-limits evenif you don’t file for bankruptcy. Most states allow you tokeep homesteads up to a specified value, pensions, basichousehold furnishings, and a modest vehicle.

Try to Avoid Bankruptcy 311

15_401170-ch06.qxp 7/24/08 1:04 AM Page 311

Transfer Credit-Card BalancesAlthough trading high interest rates for lower rates isworth checking out, credit-card balance transfers seldomare effective. A balance transfer actually is a new loan,with the proceeds going to pay debts that should bepretty far down on your list of priorities. Furthermore,whenever you transfer a balance and then end up inbankruptcy, you may be facing an allegation of fraud, andyour creditors may fight to prevent the debts you owethem from being wiped out.

Restructure Home MortgagesYou may be able to free up some cash by restructuringyour home mortgage. Basically, you can do this in twoways: arranging a mortgage workout agreement and refi-nancing.

Taking a home-equity loan doesn’t reduce the amount ofyour mortgage debt. With a home-equity loan, you essen-tially unbuy your house and then buy it back again. For avariety of reasons, home-equity loans aren’t a good ideawhen you’re in financial straits. The most important argu-ment against a home-equity loan is that it creates a lienon your home that survives bankruptcy. Say that aftersucking all the equity out of your home to pay yourcredit-card bills, you still end up in bankruptcy. Whatyou’ve done is needlessly put your house on the line. Thecredit-card debts were unsecured and would’ve probablybeen eliminated in bankruptcy. But the value of yourhouse secures the home-equity loan. Bottom line: Yourhome may be the most valuable and important asset thatyou have, and you’re putting it at risk when you play thehome-equity credit game.


15_401170-ch06.qxp 7/24/08 1:04 AM Page 312

313#121

Negotiate with Creditors to Avoid Bankruptcy

Attempting a nonbankruptcy solution is worth theeffort. If you can find someone who actually has the

authority to negotiate, you may be able to cut a deal thatworks to everyone’s satisfaction. You’re more likely tosucceed if your creditor is a small organization, but ifyour creditor is a large institution, the task will be moredifficult.

Workout AgreementsTraditionally, a nonbankruptcy workout agreement —where a debtor reaches a negotiated solution with credi-tors — falls into one of three categories:

� Composition arrangements, where all creditorsagree to accept less than full settlement of the debts

� Extension agreements, which merely extend theterm for repayment in full

� Combination agreements, where debts are reducedand paid over an extended time period

15_401170-ch06.qxp 7/24/08 1:04 AM Page 313

The problem with these plans is that all your creditorsmust go along with it, and so, the more creditors youhave, the harder it is to get them to agree. In addition,you’ll probably need a lawyer to negotiate settlementagreements, and the legal fees may be exorbitant, if notprohibitive.

Workout agreements are more useful when you have valu-able nonexempt assets that are worth enough to pay yourdebts, but you need some time to sell without having tojuggle creditors. In consumer cases, rarely does a debtorhave enough assets to pay his debts.

Strange as it may seem, whenever a creditor writes off adebt outside of the bankruptcy context, the amount ofthe write-off is taxable income to the borrower unless hewas insolvent (owed debts exceeding the value of hisassets) when the debt was kissed off. If you’re in this situ-ation, consider filing Form 982 with your tax return. Youcan get it on the IRS Web site at www.irs.ustreas.gov/formspubs/index.html (click forms and publications bynumber).

Threatening BankruptcyIf you’re genuinely considering bankruptcy, unsecuredcreditors may agree to settle for a pittance simplybecause when you do actually file, they’d receive nothing.

Assume that you borrowed $50,000 to start a business,which never got off the ground. There’s no way you canrepay this debt, and all you own is a modest home, mort-gaged to the hilt, an old car, and a pension. If you filebankruptcy, the lender won’t receive one red cent. If youoffer the creditor the money that you’d otherwise spendon filing bankruptcy, about $1,000, he should (if he’s


15_401170-ch06.qxp 7/24/08 1:04 AM Page 314

thinking rationally) agree to take the money and write offthe debt. A thousand dollars is still better than nothing.And you avoid having to file bankruptcy.

The success of this kind of strategy depends on convinc-ing your creditor that you’re truly prepared to file bank-ruptcy. The best way to accomplish that is to hire awell-known bankruptcy specialist to handle the negotia-tion. That way, the creditor knows that you’re serious.But don’t ever bluff or threaten bankruptcy unless you’retruly prepared to turn in that direction.

Negotiate with Creditors to Avoid Bankruptcy 315

15_401170-ch06.qxp 7/24/08 1:04 AM Page 315

316 #122

Choose Which Bills to PayWhen You File for

Bankruptcy

When you can’t pay everyone, you need to investyour money where it does the most good or

avoids the gravest of problems. Dribbling out money tothe most aggressive collectors without an overall plan isa mistake. The payments at the top of your priority list(in order) should be your

� Rent, or mortgage, if you intend to keep your house

� Utilities

� Essential vehicle

� Fines, if nonpayment would land you in jail

� Child support and alimony

� Income taxes

� Possibly student loans

15_401170-ch06.qxp 7/24/08 1:04 AM Page 316

A note about paying child support and alimony: The con-sequences for neglecting those obligations are serious,possibly even criminally serious if you’re jailed for con-tempt of court. And many judges have adopted a zero-tolerance approach toward deadbeat parents.

It’s no accident that credit cards, loans from finance com-panies, and medical bills don’t make the cut in this list.That’s because before creditors in these industries canever cause you any real trouble they have some hurdlesto jump over. Before they can take any of your property,they must sue you and obtain a judgment. Besides, thesekinds of debts can be wiped out if you end up in bank-ruptcy. In addition, if bankruptcy is in your future, youshouldn’t repay loans to close friends or family membersor loans that these people cosigned for. If you file bank-ruptcy within one year of making these types of pay-ments, the trustee can get the money back.

Choose Which Bills to Pay When You File for Bankruptcy 317

15_401170-ch06.qxp 7/24/08 1:04 AM Page 317

318 #123

Negotiate with the IRS

Taxpayers and courts long have complained, and withgood reason, about the overbearing presence of the

Internal Revenue Service. A few years ago, however,Congress passed legislation imposing a wide range ofrestrictions on the collection efforts of the IRS. So now,after years of nurturing its reputation as a bulldog, theIRS is considerably less arrogant and appreciably morehumble than it once was. And with all the new proce-dures, IRS collection efforts have become so burdensomethat authorities are more willing to settle than everbefore.

Your Due ProcessOne of the reforms, known as collection due process,requires the IRS to give you at least 30 days warningbefore seizing your property and to notify you of yourright to appeal its determinations.

The appeal provides you with an opportunity to claimthat you’re an innocent spouse (where your wife or hus-band fudged a joint tax return without telling you) ordetermine the appropriateness of an asset seizure and thecorrectness of the amount the IRS claims is due. Moreimportant, you can also propose alternative payment planssuch as installment agreements or offers in compromise. If

15_401170-ch06.qxp 7/24/08 1:04 AM Page 318

the appeals office turns you down, you can go to federalcourt and have a judge review the situation. All these newprocedural safeguards must take place before any of yourproperty is actually seized.

Negotiate an InstallmentAgreement

When you owe less than $25,000, getting the IRS to accepta payment proposal is actually pretty easy. An installmentagreement requires that you

� Make all payments on time.

� File all future tax returns and pay the taxes due onthose returns in full.

� Furnish updated financial information wheneverrequested.

� Agree that any state or federal refunds be applied toyour unpaid taxes.

If you owe $25,000 or more or your request for an install-ment agreement has been denied, you’ll want to hire alawyer or accountant who’s experienced in dealing withthe IRS. At this juncture, the IRS can and does insist ondetailed information about all your assets and yourfamily’s income and living expenses.

Gain “Uncollectible” StatusIf the IRS determines that collecting the tax creates anundue hardship, it may suspend collection efforts indefi-nitely. (In IRS-speak, the account is “53’d,” based on the

Negotiate with the IRS 319

15_401170-ch06.qxp 7/24/08 1:04 AM Page 319

number of the form the revenue officer must completewhen reporting that an account is uncollectible.)

Undue hardship means you’re unable to meet necessaryliving expenses if required to make installment paymentsor if the IRS seizes your assets. The agency distinguishesbetween undue hardship and mere inconvenience — usu-ally finding in favor of the former when it thinks pursuingyou isn’t worthwhile and finding the latter when goingafter your assets may be worthwhile. However, even withan undue hardship, your tax isn’t abated. Taxes andpenalties continue to accrue, and tax liens aren’treleased. And, of course, the IRS continues to grab yourrefunds.

Submit an Offer in CompromiseUnlike a payment agreement, an offer in compromise thatthe IRS accepts actually results in a reduction in theamount you owe. The three grounds for an offer in com-promise are

� Doubt about whether you actually owe the tax.

� Doubt about whether you have sufficient assets andincome to pay the tax in full.

� Exceptional hardship or unfair or inequitable cir-cumstances caused by payment in-full requirements.

When determining how much it will accept in settlement,the IRS looks at your present assets and future earningability. It calculates how much it would receive from aquick sale of all your assets and adds a lump-sum amountbased on what it figures you’d have been able to pay ontaxes during the next 48 months.


15_401170-ch06.qxp 7/24/08 1:04 AM Page 320

Part VII

The Part of Tens

16_401170-pp07.qxp 7/24/08 1:05 AM Page 321

In this part . . .

You can view reducing what you spend in twoways: as an unpleasant chore that can suck

much of the joy out of life, or as an opportunity toevaluate what’s really important to you so you canget your spending habits in sync with your values.Here’s a little secret: You have a lot more successand fun if you adopt the second perspective.

This part gives you miscellaneous tips on how tocut back on your spending without reducing yourquality of living. And because everyone faces finan-cial crises at one time or another, it also deliversadvice on how to survive financial emergencies.

16_401170-pp07.qxp 7/24/08 1:05 AM Page 322

323#124

Ten Ways to Trim the Money Tree

� Determine which expenses you can eliminate with-out affecting your quality of life. For example, canyou downgrade your cable and still get the channelsthat matter most to you?

� Eat out less often. A family of four can easily spend$30 at a very inexpensive restaurant. You can makethat same meal, or a much better one, at home forabout one-third of the cost.

� Plant a small vegetable and herb garden. Not onlydo you save on grocery bills, but you also benefitfrom homegrown fun and flavor.

� Cook a giant feast on weekends and freeze the left-overs in individual containers. Now you havehomemade, ready-to-heat meals for a fraction of thecost of quality processed frozen foods.

� Sell items you don’t use or need, and purchasequality secondhand items. Check out Craigslist(www.craigslist.org), an online classifieds site that offers everything from housemates tohorseshoes.

� Become a do-it-yourselfer. If you currently hiresomeone to mow, clean, or provide other domesticservices, explore how much money you could saveby doing these projects yourself.

17_401170-ch07.qxp 7/24/08 1:05 AM Page 323

� Get the kids on board. Involving your children inmoney management discussions and decisionsempowers them to carry out a thrifty lifestyle.

� Donate wisely. Make a list of charities you candonate to and politely decline when you receive arequest from the others. Check out CharityNavigator (www.charitynavigator.org), a non-profit organization that rates charities based ontheir financial health and provides info on howmuch of your donation actually goes to the programs.

� Revive the dying activity of window shopping.Gather a group of friends to simply walk throughstores, browsing to see what’s new and to admirethe displays.

� Shop in your own home. After years of overcon-suming, many people have extra dishes, furniture,clothing, and more. When you feel a hankering toredecorate a room or set a special table for the holi-days, go shopping through the items you alreadyhave.

Part VII: The Part of Tens 324

17_401170-ch07.qxp 7/24/08 1:05 AM Page 324

325#125

Ten Ways to Handle Financial Emergencies

� Plan ahead. Build a savings cushion of six monthsof living expenses and make sure you have adequateinsurance. Leave room in your monthly budget forsurprises. Focus on the plan, and results will follow.

� Pay yourself first. Put savings away as soon as youget paid. If you can, have it taken from your checkand directly deposited into your savings accountbefore you ever see it.

� Reduce tax deductions. If you get more than $600 ayear back in refunds, you’d be better off having thatmoney on a month-to-month basis, earning the inter-est yourself.

� Earn more money. Get a second job, work overtime,or ask for that long overdue raise.

� Sell some assets. Whether you sell your grand pianoon eBay or gather your clutter and hold a garagesale, you just may be able to offset some or all ofyour emergency costs by turning your possessionsinto ready cash.

17_401170-ch07.qxp 7/24/08 1:05 AM Page 325

� Borrow against your home. If you own a home,have built up equity, and can afford an additionalmonthly payment, a home-equity line of credit maybe just the ticket. Interest payments are incurredonly if you draw on the line of credit, and they maybe tax deductible.

� Borrow from friends and relatives. Just make sureyou put the terms of the loan in writing, establish aregular payment schedule, and pay interest as youwould with a traditional loan.

� Defer retirement contributions. If you’re regularlycontributing to a retirement plan, temporarily funnelthe money toward emergency expenses instead.

� Seek professional help. If you see no other way outof your financial crisis, call in the professionals at acredit-counseling agency.

� Declare bankruptcy. Filing for bankruptcy is a legiti-mate way to handle a financial emergency if nothingelse succeeds.

Part VII: The Part of Tens 326

17_401170-ch07.qxp 7/24/08 1:05 AM Page 326

Index• A •AAA (American Automobile

Association), 240accidental death insurance, 100accounting software, 86addictive behavior, 115, 265advance, cash, 96, 294aggregator, 56–57aging report, 86alarm, house, 102alimony, 317American Automobile

Association (AAA), 240amortization worksheet, 299anger management, 35Annual Credit Report Request

Service, 269annual return, 122ASE (National Institute for

Automotive ServiceExcellence), 240

assetin child’s name, 134–135nonexempt, 307, 311, 314selling in financial

emergency, 325selling to avoid bankruptcy, 311

asset-backed debt, 282–283attic

insulation, 216–217ventilation, 204, 217

auction site, 187

auto insurancediscounts and premium credits

from, 106–108medical coverage offered by,

109–110

• B •bad check, 95, 264bad credit, 266–267baking soda, 211balance transfer, 312bank scholarship, 150bankruptcy

budgeting to avoid, 310chapter 13, 308–309chapter 7, 307–308credit counseling, 286family bail out, 311foreclosure, 304handling financial

emergencies, 326negotiating with creditors,

313–315prioritizing bills, 316–317restructuring home mortgages,

312selling assets, 311transferring credit-card

balances, 312Better Business Bureau, 240bill, unpaid, 263

18_401170-bindex.qxp 7/24/08 1:08 AM Page 327


bill collectorcredit counseling, 282negotiating payback

arrangement with, 291–292bleach, 211–212bonus money, 79breakfast, 166–167breathing exercise, 24–25budgeting

to avoid bankruptcy, 310monthly expenses, 20–23tips, 323–324during unemployment, 295

BudgetMap ledger, 22bulk cooking, 176–178

• C •Canadian Automobile

Association (CAA), 240canning, 179–180captive insurance agent, 97car. See transportationcar insurance. See auto

insurancecareer

changing, 60–61choosing, 62–64

cash advance, 96, 294cash flow, new-business

converting employer intoclient, 78

financing with startup funds,77–78

start part-time, 76–77cellphone, 202–203Chamber of Commerce, 150chapter 13 bankruptcy, 308–309chapter 7 bankruptcy, 307–308

Charity Navigator, 324check card, 278checking account, 95, 264child support, 317Christmas, 251cleaning solution

baking soda, 211bleach, 211–212overview, 209white vinegar, 210

closing cost, 156clothing

alterations, 191cleaning, 188–189, 210–211exchange, 186hand-me-downs, 185reconstructing, 190reusing, 191–192school clothes, 186–187

COBRA (Consolidated OmnibusBudget Reconciliation Actof 1985), 80, 111, 119

collection due process, 318collector. See bill collectorcollege. See educationcombination agreement, 313community resource, 193commuting, 106. See also

telecommutingcompetency-based approach, 40composition arrangement, 313conduit IRA, 128–129Consolidated Omnibus Budget

Reconciliation Act of 1985(COBRA), 80, 111, 119

Consolidation Loan, 146–147contract work, 71, 78cooking

in bulk, 176–178energy conservation, 205


leftovers, 323with slow cooker, 178

cooling expense, 204–205core resume, 39–40cost. See expensecoupon

eating out, 259pretrip planning, 195using effectively, 163

Coverdell account, 131–132covered-dish dinner, 247Craig’s List, 77, 323credit

accounts, 21bureaus, 269, 273, 292counseling agency, 284–286deferring student loans, 281history and auto insurance

costs, 107missing credit card payment,

279–280problems, 282–283using during unemployment,

294–296credit card

business, 77cash advances, 96destroying, 277–278late payment fee, 95missing monthly payment,

279–280solicitations, 276–277transferring balances, 312when leaving employment, 80

credit reportadding positive

information, 275checking, 270–271debt-management plan, 288

disputing inaccurateinformation, 272–274

getting copies of, 268–269credit score, 266–269, 296creditor, 289–290, 313–315credit-repair scam, 293

• D •debit card, 95debt-consolidation, 297–299debt-management plan, 285,

287–288deductible, 99, 115deduction, tax, 325deeding to bank, 305deep muscle relaxation, 26–29deferring. See dischargingdinner, 169direct Consolidation Loan, 146Direct Loan Program, 140Direct Marketing

Association, 277direct rollover, 127disability insurance, 98discharging

retirement contributions, 326student loan debt, 143–145, 281

Distant Student discount, 107donation, 21, 254, 324draft

reducing, 207–208windows and doors, 221–223

• E •Easter, 249eating. See food

Index 329


educationconsolidating loans, 146–147Coverdell accounts, 131–132discharging debt, 143–145federal assistance programs,

137–138federal loans, 139–142Federal Work-Study jobs, 152financial strategies for, 133–136negotiating financial aid,

153–154preparing for career changes,

60–61resume category, 40scholarships, 148–151section 529 plans, 130–131taxable and tax-exempt income,

133education savings account

(ESA), 131–132EFC (expected family

contribution), 134–136, 138employer, converting into

client, 78employment group

scholarship, 151endowment, 148, 150entertainment

covered-dish dinners, 247family field trip, 194–195fine dining, 258–259game night, 195, 248movie night, 196parties on budget, 245–246wine-tasting party, 247–248

Equifax, 269, 273e-resume, 41, 44ESA (education savings

account), 131–132

Excess Major Medical policy, 114exempt asset, 311expansion technique, 44–45expected family contribution

(EFC), 134–136, 138expense

budgeting, 22–23categorizing, 20–22cooling, 204–205essential, 16–19fuel, 230–231heating, 206–208in-office, 65teenagers sharing, 90–91tracking, 19

Experian, 269, 273extension agreement, 313external scholarship, 148

• F •face massage, 34FAFSA (Free Application for

Federal Student Aid),134–135, 137

Fair Credit Reporting Act (FCRA),273

federal assistance program,137–138

Federal Family Education Loan(FFEL) Program, 140, 147

federal job, 59, 70federal loan

Parent Loans forUndergraduate Students(PLUS) loans, 140–141

Perkins Loans, 141–142Stafford Loans, 139–140



Federal Pell Grant program,137–138

Federal SupplementalEducational OpportunityGrant (FSEOG), 138

Federal Trade Commission(FTC), 273

fee, 95–96, 108, 115, 156FFEL (Federal Family Education

Loan) Program, 140, 147FICO score, 269, 28853’d account, 319finances, freezing, 300–301financial aid, 153–154financial emergency, 263–265,

325–326fixed-rate mortgage, 155–156floor insulation, 217–218foam sealant, 222–223food

baby, 174–175canning, 179–181cooking suggestions, 176–178,

205, 323coupons, 163entertaining guests, 247freezing finances, 301as gifts, 255–257grocery store gimmicks,

161–162meal planning, 166–169parties, 245–246restaurants, 200, 258–259, 323seasonal sales, 164–165shopping habits, 159–160snacks, 170stress management, 35–36stretching meals, 171–173,

182–183

foot massage, 33forbearance agreement, 304forced-air heating system, 227foreclosure

contacts, 302freezing finances, 300–301legal documents, 302–303plan to offset, 304–306prioritizing bills, 296, 301

foundation scholarship, 151401(k) plan

borrowing from, 124–126investing, 122–123roll over into another

employer’s plan, 128–129roll over into IRA, 127–128tax benefits, 120–121when leaving employment, 79

franchise, 72Free Application for Federal

Student Aid (FAFSA),134–135, 137

freezing finances, 300–301fruit, 179FSEOG (Federal Supplemental

Educational OpportunityGrant), 138

FTC (Federal TradeCommission), 273

fuel expense, 230–231fund, startup, 77–78funding, merit-based, 148, 154funding, need-based

college-based scholarships, 148Federal Pell Grant program, 137FSEOG program, 138Perkins Loan, 141receiving more, 153

furnace efficiency, 227–229

Index 331


• G •game night, 195, 248GDP (gross domestic product), 1gift

buying strategies, 251creative, 252–254sweets and treats, 255–257

good faith conduct, 308Good Student discount, 107grace period, 141–142, 144, 280grocery store gimmick, 161–162gross domestic product (GDP), 1gross income, 120group health coverage, 80, 111.

See also medical insuranceguidance counselor, 149

• H •haircut, 184Halloween, 250hand massage, 32hand-me-down clothing, 185Hanukkah, 251hardship program, 292health club, 103health insurance. See medical

insuranceHealth Insurance Portability and

Accountability Act (HIPAA),111–112

heat duct, 220heating expense, 206–208HIPAA (Health Insurance

Portability andAccountability Act),111–112

holiday, 249–251home mortgage, 312home-based business, 74–75,

82–86home-equity line of credit, 80,

297–299, 326home-office. See telecommutinghome-office deduction, 82–83homeowner insurance, 102–105Hope Scholarship program, 138hot-water heating system, 228household income, 89–91humor, 36

• I •identity theft, 271IGO (Independent Garage

Owners Association), 240impulse purchase, 161, 245income

household, 89–91spendable, 13–19

independent contractor, 78Independent Garage Owners

Association (IGO), 240independent insurance agent, 98individual health insurance, 111innocent spouse, 318in-office expense, 65installment agreement, 319instrument rental, 104insulating

attic, 216–217floors, 217–218heat ducts, 220order of importance, 204pipes, 219



walls, 217water heaters, 225–226

insuranceaccidental death, 100auto, 106–110disability and long-term care,

98homeowners, 102–105life, 100–101medical, 98, 109–115, 118–119raising deductible, 99shopping around for, 97–98when leaving employment, 80

interest rate401(k) plan, 125bad credit, 266fixed-rate mortgages, 155PLUS loans, 140

Internal Revenue Service (IRS),83, 318–320. See also tax

Internet. See also Web sitejob searches via, 56–58, 69–70online shopping, 163phone services, 203

interview, 46–55interviewer, 46, 50–51investing, 122–123IRA, 127–129IRS (Internal Revenue Service),

83, 318–320. See also taxitemized deduction, 87–88

• J •job, 68–69, 79–81job board, 57–58job hopper perception, 45job hunting, online, 56–58joint credit problem, 282

• K •kitchen economy, 176–183

• L •La Leche League, 174late payment, 95, 265, 270leftover food, 171–172life insurance, 100–101Lifetime Learning Credits

program, 138loan, 139–142, 146–147, 298Loan Origination Center site, 147local scholarship, 149–150long-term care insurance, 98loss leader, 162lunch, 167–168

• M •MAGI (modified adjusted gross

income), 152maintenance, car

choosing mechanic, 239–241oil change, 232–235tires, 236–238

maintenance, homeboiler, 228–229chimney, 102, 208drafts, 207–208, 221–223furnace, 227–229insulating, 216–220plumbing, 224roof repair, 213–215water heater, 225–226

massage. See self-massagematching contribution, 120

Index 333


meal. See foodMeans Test, 308mechanic, 239–241Med Pay (Medical Payments)

coverage, 109Medicaid, 112medical insurance, 98, 109–115,

118–119Medical Payments (Med Pay)

coverage, 109medical savings account (MSA),

116–117mere inconvenience, 320merit-based funding, 148, 154minimum payment, 264modified adjusted gross income

(MAGI), 152monthly budget, 20–23moonlighting, 89–90mortgage

fixed-rate, 155–156home, 312missing payment or paying late,

280priority in paying, 296reinstating, 304

movie night, 196MSA (medical savings account),

116–117musical instrument rental, 104myFICO, 269

• N •National Association of Health

Underwriters (NAHU), 111National Association of State

Comprehensive HealthInsurance Plans (NASCHIP),112

National Do Not Call list, 277National Institute for Automotive

Service Excellence (ASE), 240

neck massage, 33need-based funding

college-based scholarships, 148Federal Pell Grant program, 137FSEOG program, 138Perkins Loan, 141receiving more, 153

negative activity, 271net worth, 11–12networking, 60new-business cash flow

converting employer intoclient, 78

financing with startup funds,77–78

start part-time, 76–77niche job board, 58no-asset bankruptcy, 307nonessential expense, 22–23nonexempt asset, 307, 311, 314

• O •offer in compromise, 320oil change, 232–235online coupon, 163online job hunting, 56–58out-of-pocket purchase, 22overdraft, 95, 271

• P •Parent Loans for Undergraduate

Students (PLUS) loan,140–141



Parent-Teacher Association(PTA), 150

partial rollover, 127–128party planning, 245–246payment outside the plan, 308Perkins Loan, 141–142, 144–145Personal Injury Protection (PIP)

coverage, 109phone bill, 202–203phone interview, 54–55piecemeal life insurance, 100PIP (Personal Injury Protection)

coverage, 109pipe insulation, 219plumbing, 224PLUS (Parent Loans for

Undergraduate Students)loan, 140–141

positive cash-flow, 285preexisting medical condition, 118premade meal, 176prepackaged food, 159, 175preparing

for career changes, 60–61core resumes, 39–40for emergencies, 325for interviews, 49, 53–55for job loss, 1

pressure canning, 180pressure cooker, 178pre-tax contribution, 120prime rate, 125principal, 287prioritizing bill, 296, 301, 316–317processed food, 159profit sharing, 79progressive relaxation, 26–29PTA (Parent-Teacher

Association), 150

• Q •qualified tuition program,

130–131quarterly payment, 21

• R •receivables, 86recession, 1recreation. See also

entertainmentcommunity resources, 193freezing finances, 301holidays, 249–251local, 194–196vacation, 197–201

referral, 241refinancing, 155–156, 305relaxation

breathing exercises, 24–25habits, 35–36progressive, 26–29self-massage, 32–34streching, 30–31

religious institution scholarship, 150

replacement service, 109resignation, 79–81restaurant

alternatives to, 200fine dining, 258–259

resumecompetencies, 40core, 39–40expansion technique, 44–45federal, 59focusing, 43–44

Index 335


resume (continued)negative perceptions, 45researching job requirements, 41spinoff, 41–42using keywords, 44

retirement, 326retirement plan, See 401(k) planreuse, 159–160, 190, 245rollover IRA, 128roof repair, 213–215Roth IRA, 128

• S •salary, 51, 54–55sandwich, 172SCHIP (State Children’s Health

Insurance Program), 112scholarship, 148–151school clothing, 186–187SCRA (Servicemembers Civil

Relief Act) of 2003, 305screening interview, 49, 54–55sealant, foam, 222–223seasonal saving

clothing, 186food, 164–165holiday gifts, 250–251travel, 198

second job, 89–90section 529 plan, 130–131secured loan, 298selection interview, 49–50self-employment, 72–73self-massage, 32–34service club scholarship, 151service fee, 95Servicemembers Civil Relief Act

(SCRA) of 2003, 305

shelf arrangement, grocery store, 162

shoppingcoupons, 163habits, 159–160recycling bags, 160seasonal sales, 164–165seasonally, 186

shortfall, 18–19short-term health coverage,

118–119shoulder massage, 33skill

determining, 63preparing for career changes, 61resume category, 40

slow cooker, 178smoke detector, 102smoking, 115snack, 170social club scholarship, 151Social Security number, 270–271,

293social support, 36solicitation, 276–277Special Perils contents coverage,

104specialty job board, 58spendable income, 13–19spending, unregulated, 264spinoff resume, 41–42spouse, innocent, 318Stafford Loan, 139–140, 143–144stain removal, 188–189standard deduction, 87–88startup fund, 77–78State Children’s Health Insurance

Program (SCHIP), 112



state high-risk health insurancepool, 112

state scholarship, 149–150steam heating system, 228–229storytelling skill, 48, 61stress management

breathing exercises, 24–25habits, 35–36progressive relaxation, 26–29self-massage, 32–34stretching, 30–31

student, 107. See also educationstudent loan, 143–145, 281subsidized loan, 139–140sump pump system, 103swimming pool, 103

• T •targeted resume, 41–42tax, 82–84, 127–129telecommuting

converting contract work into,71

converting traditional job into,70–71

job options, 68–69persuading employer, 65–67searching Web, 69–70telecommuter-friendly

companies, 70temper, controlling, 35temporary health insurance,

118–119tension reduction. See stress

managementtime management, 36tire care, 236–238trade group scholarship, 151

trailer, 104trampoline, 103transitioning

to new businesses, 76–77to telecommuting jobs, 70–71

transportationfuel expenses, 230–231oil changes, 232–235professional repair, 239–241tires, 236–238

TransUnion, 269, 273travel, 198–201travel accident insurance, 100trustee-to-trustee transfer, 127

• U •uncollectible status, 319–320undue hardship, 320unemployment, 294–296unpaid bill, 263unregulated spending, 264unsecured loan, 298unsubsidized loan, 139–140

• V •vacation, 197valuables, 105value proposition, 42vertical job search engine

(VJSE), 56–57video interview, 46–47, 52–53video rental, 196virtual handshake, 53VJSE (vertical job search

engine), 56–57voice mail, 202

Index 337


• W •wall insulation, 217wardrobe. See clothingwater heater, 225–226water-bath canning, 180weatherstripping, 222–223Web site

auction, 187BudgetMap, 22Charity Navigator, 324Craig’s List, 77, 323credit report and score,

269, 273Direct Marketing

Association, 277education, 61FAFSA, 134federal jobs, 59Federal Trade Commission, 274health coverage, 111–112Hope Scholarship Credit, 138house swapping, 199IRS publications, 83, 314job boards, 57–58La Leche League, 174Lifetime Learning Credit, 138Loan Origination Center, 147

National Do Not Call list, 277online shopping, 163phone services, 203pretrip planning, 195SCRA of 2003, 305Skills Profiler, 63telecommuting jobs, 69–70vertical job search engines,

56–57white vinegar, 210window shopping, 324wine, 247–248, 258worklife mission statement, 62workout agreement, 313–314worksheet

net worth, 12spendable income, 14–15, 17–18

work-study opportunity, 152

• Y •yearly payment, 21



BUSINESS, CAREERS & PERSONAL FINANCEAccounting For Dummies, 4th Edition*978-0-470-24600-9

Bookkeeping Workbook For Dummies† 978-0-470-16983-4

Commodities For Dummies 978-0-470-04928-0

Doing Business in China For Dummies 978-0-470-04929-7

E-Mail Marketing For Dummies978-0-470-19087-6

Job Interviews For Dummies, 3rd Edition* † 978-0-470-17748-8

Personal Finance Workbook For Dummies* † 978-0-470-09933-9

Real Estate License Exams For Dummies 978-0-7645-7623-2

Six Sigma For Dummies978-0-7645-6798-8

Small Business Kit For Dummies, 2nd Edition* † 978-0-7645-5984-6

Telephone Sales For Dummies 978-0-470-16836-3

FOOD, HOME, GARDEN, HOBBIES & HOME

Available wherever books are sold. For more information or to order direct: U.S. customers visit www.dummies.com or call 1-877-762-2974. U.K. customers visit www.wileyeurope.com or call (0) 1243 843291. Canadian customers visit www.wiley.ca or call 1-800-567-4797.

HEALTH, SELF HELP, PARENTING & PETS

* Separate Canadian edition also available† Separate U.K. edition also available

Bridge For Dummies, 2nd Edition978-0-471-92426-5

Coin Collecting For Dummies, 2nd Edition 978-0-470-22275-1

Cooking Basics For Dummies, 3rd Edition978-0-7645-7206-7

Drawing For Dummies978-0-7645-5476-6

Etiquette For Dummies, 2nd Edition978-0-470-10672-3

Gardening Basics For Dummies*† 978-0-470-03749-2

Knitting Patterns For Dummies978-0-470-04556-5

Living Gluten-Free For Dummies† 978-0-471-77383-2

Painting Do-It-Yourself For Dummies 978-0-470-17533-0

Anger Management For Dummies 978-0-470-03715-7

Anxiety & Depression Workbook For Dummies978-0-7645-9793-0

Dieting For Dummies, 2nd Edition978-0-7645-4149-0

Dog Training For Dummies, 2nd Edition978-0-7645-8418-3

Horseback Riding For Dummies 978-0-470-09719-9

Infertility For Dummies† 978-0-470-11518-3

Meditation For Dummies with CD-ROM, 2nd Edition978-0-471-77774-8

Post-Traumatic Stress Disorder For Dummies 978-0-470-04922-8

Puppies For Dummies, 2nd Edition978-0-470-03717-1

Thyroid For Dummies, 2nd Edition† 978-0-471-78755-6

Type 1 Diabetes For Dummies*† 978-0-470-17811-9

EDUCATION, HISTORY, REFERENCE & TEST PREPARATION

BUSINESS PRODUCTIVITY & MICROSOFT OFFICEseimmuD roF 7002 sseccA

978-0-470-03649-5

Excel 2007 For Dummies978-0-470-03737-9

Office 2007 For Dummies978-0-470-00923-9

Outlook 2007 For Dummies978-0-470-03830-7

PowerPoint 2007 For Dummies978-0-470-04059-1

Project 2007 For Dummies978-0-470-03651-8

QuickBooks 2008 For Dummies978-0-470-18470-7

Quicken 2008 For Dummies978-0-470-17473-9

Salesforce.com For Dummies, 2nd Edition978-0-470-04893-1

Word 2007 For Dummies978-0-470-03658-7

African American History For Dummies978-0-7645-5469-8

Algebra For Dummies978-0-7645-5325-7

Algebra Workbook For Dummies978-0-7645-8467-1

Art History For Dummies978-0-470-09910-0

ASVAB For Dummies, 2nd Edition978-0-470-10671-6

British Military History For Dummies978-0-470-03213-8

Calculus For Dummies978-0-7645-2498-1

Canadian History For Dummies, 2nd Edition978-0-470-83656-9

Geometry Workbook For Dummies978-0-471-79940-5

The SAT I For Dummies, 6th Edition978-0-7645-7193-0

Series 7 Exam For Dummies978-0-470-09932-2

World History For Dummies 978-0-7645-5242-7

19_401170-badvert.qxp 7/24/08 1:08 AM Page 339

AdWords For Dummies978-0-470-15252-2

Blogging For Dummies, 2nd Edition978-0-470-23017-6

Digital Photography All-in-One Desk Reference For Dummies, 3rd Edition978-0-470-03743-0

Digital Photography For Dummies, 5th Edition978-0-7645-9802-9

Digital SLR Cameras & Photography For Dummies, 2nd Edition978-0-470-14927-0

eBay Business All-in-One Desk Reference For Dummies978-0-7645-8438-1

eBay For Dummies, 5th Edition*978-0-470-04529-9

eBay Listings That Sell For Dummies978-0-471-78912-3

Facebook For Dummies978-0-470-26273-3

The Internet For Dummies, 11th Edition978-0-470-12174-0

Investing Online For Dummies, 5th Edition978-0-7645-8456-5

iPod & iTunes For Dummies, 5th Edition978-0-470-17474-6

MySpace For Dummies978-0-470-09529-4

Podcasting For Dummies978-0-471-74898-4

Search Engine Optimization For Dummies, 2nd Edition978-0-471-97998-2

Second Life For Dummies978-0-470-18025-9

Starting an eBay Business For Dummies,3rd Edition† 978-0-470-14924-9

GRAPHICS, DESIGN & WEB DEVELOPMENT

NETWORKING AND PROGRAMMING

INTERNET & DIGITAL MEDIA

LANGUAGES, RELIGION & SPIRITUALITY

Adobe Creative Suite 3 Design Premium All-in-One Desk Reference For Dummies978-0-470-11724-8

Adobe Web Suite CS3 All-in-One Desk Reference For Dummies978-0-470-12099-6

AutoCAD 2008 For Dummies978-0-470-11650-0

Building a Web Site For Dummies, 3rd Edition978-0-470-14928-7

Creating Web Pages All-in-One Desk Reference For Dummies, 3rd Edition978-0-470-09629-1

Creating Web Pages For Dummies, 8th Edition978-0-470-08030-6

Dreamweaver CS3 For Dummies978-0-470-11490-2

Flash CS3 For Dummies978-0-470-12100-9

Google SketchUp For Dummies978-0-470-13744-4

InDesign CS3 For Dummies978-0-470-11865-8

Photoshop CS3 All-in-One Desk Reference For Dummies978-0-470-11195-6

Photoshop CS3 For Dummies978-0-470-11193-2

Photoshop Elements 5 For Dummies978-0-470-09810-3

SolidWorks For Dummies978-0-7645-9555-4

Visio 2007 For Dummies978-0-470-08983-5

Web Design For Dummies, 2nd Edition978-0-471-78117-2

Web Sites Do-It-Yourself For Dummies978-0-470-16903-2

Web Stores Do-It-Yourself For Dummies978-0-470-17443-2

Arabic For Dummies 978-0-471-77270-5

Chinese For Dummies, Audio Set 978-0-470-12766-7

French For Dummies978-0-7645-5193-2

German For Dummies978-0-7645-5195-6

Hebrew For Dummies978-0-7645-5489-6

Ingles Para Dummies978-0-7645-5427-8

Italian For Dummies, Audio Set 978-0-470-09586-7

Italian Verbs For Dummies978-0-471-77389-4

Japanese For Dummies978-0-7645-5429-2

Latin For Dummies978-0-7645-5431-5

Portuguese For Dummies978-0-471-78738-9

Russian For Dummies978-0-471-78001-4

Spanish Phrases For Dummies978-0-7645-7204-3

Spanish For Dummies978-0-7645-5194-9

Spanish For Dummies, Audio Set978-0-470-09585-0

The Bible For Dummies978-0-7645-5296-0

Catholicism For Dummies978-0-7645-5391-2

The Historical Jesus For Dummies 978-0-470-16785-4

Islam For Dummies978-0-7645-5503-9

Spirituality For Dummies, 2nd Edition 978-0-470-19142-2

ASP.NET 3.5 For Dummies978-0-470-19592-5

C# 2008 For Dummies978-0-470-19109-5

Hacking For Dummies, 2nd Edition978-0-470-05235-8

Home Networking For Dummies, 4th Edition978-0-470-11806-1

Java For Dummies, 4th Edition978-0-470-08716-9

Microsoft® SQL Server™ 2008 All-in-One Desk Reference For Dummies978-0-470-17954-3

Networking All-in-One Desk Reference For Dummies, 2nd Edition978-0-7645-9939-2

Networking For Dummies, 8th Edition978-0-470-05620-2

SharePoint 2007 For Dummies978-0-470-09941-4

Wireless Home Networking For Dummies, 2nd Edition978-0-471-74940-0


Available wherever books are sold. For more information or to order direct: U.S. customers visit www.dummies.com or call 1-877-762-2974. U.K. customers visit www.wileyeurope.com or call (0) 1243 843291. Canadian customers visit www.wiley.ca or call 1-800-567-4797.

Get smart @ dummies.com®

• Find a full list of Dummies titles

• Look into loads of FREE on-site articles

• Sign up for FREE eTips e-mailed to you weekly

eht yrrac stcudorp rehto tahw eeS •Dummies name

• Shop directly from the Dummies bookstore

• Enter to win new prizes every month!

OPERATING SYSTEMS & COMPUTER BASICS

* Separate Canadian edition also available† Separate U.K. edition also available

iMac For Dummies, 5th Edition978-0-7645-8458-9

Laptops For Dummies, 2nd Edition978-0-470-05432-1

Linux For Dummies, 8th Edition978-0-470-11649-4

MacBook For Dummies978-0-470-04859-7

Mac OS X Leopard All-in-One Desk Reference For Dummies978-0-470-05434-5

Mac OS X Leopard For Dummies978-0-470-05433-8

Macs For Dummies, 9th Edition978-0-470-04849-8

PCs For Dummies, 11th Edition978-0-470-13728-4

Windows® Home Server For Dummies978-0-470-18592-6

Windows Server 2008 For Dummies978-0-470-18043-3

Windows Vista All-in-One Desk Reference For Dummies978-0-471-74941-7

Windows Vista For Dummies978-0-471-75421-3

Windows Vista Security For Dummies978-0-470-11805-4

SPORTS, FITNESS & MUSIC

Coaching Hockey For Dummies978-0-470-83685-9

Coaching Soccer For Dummies 978-0-471-77381-8

Fitness For Dummies, 3rd Edition978-0-7645-7851-9

Football For Dummies, 3rd Edition978-0-470-12536-6

GarageBand For Dummies978-0-7645-7323-1

Golf For Dummies, 3rd Edition978-0-471-76871-5

Guitar For Dummies, 2nd Edition978-0-7645-9904-0

Home Recording For Musicians For Dummies, 2nd Edition978-0-7645-8884-6

iPod & iTunes For Dummies, 5th Edition 978-0-470-17474-6

Music Theory For Dummies 978-0-7645-7838-0

Stretching For Dummies 978-0-470-06741-3


Check out the Dummies Product Shop at www.dummies.com for more information!

DVDs • Music • Games • DIY • Crafts Consumer Electronics • Software Hobbies • Cookware • and more!

Do More with Dummies

Products for the Rest of Us!
